Cost Segregation - First Investment Property

[Chris Dawson]

Hi, I am in the process of purchasing my first investment property. I am looking at a house close to my primary residence for around 1.8M; I plan to rent it out for the first year while I obtain permits and plans to build a larger house. The property sits on 0.37 acres and has lots of potential. 

I am a business owner and have an S-corporation. My wife is currently studying for her real estate license, so we can perform a cost segregation study on the property when we buy one to reduce our tax burden for 2024. I see the House passed the Tax Relief for American Families and Workers Act of 2024, meaning that bonus deprecation may get extended. 

From my understanding, you can only claim 60% for 2024; I do not understand how much bonus/accelerated depreciation we could take on a 1.8M property without a remodel. Can we still perform a cost segregation study on this? and if so, what percentage could we claim as a loss? 

Thanks in advance. 

[Julio Gonzalez]

@Chris Dawson

Here's an article with additional FAQs on cost segregation studies that you may find helpful:https://www.biggerpockets.com/forums/51/topics/1113749-cost-segregation-faq

You can definitely perform a cost segregation study. The question is just how beneficial it'll be based on the property and your specific circumstances. Cost segregation companies offer free cost/benefit analysis quotes to help you decide how beneficial the study will be for you. Feel free to reach out if you have any questions!