Oversimplified Cost Seg Example II

[Eric Williams]

This time I wanted to add a property to show that the benefits of cost segs on residential rentals may improve as the income producing properties increases.

Not much has changed except for gross rental of 40k, designed to represent net income, has been added (you could also pretend to divide 40 across multiple properties)

However, the bonus depreciation not used on the "Property A" gets transferred over to "Property B" (in effect).

Although this doesn't offset W-2 income, don't ignore the fact rental income is taxed at ordinary rates, so the benefit is still there.

I think the takeaway may be consider holding off on the bonus until you have more properties if there are insufficient, other passive activities to absorb the amounts.