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Updated 12 months ago on . Most recent reply presented by

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Larry King
  • Lake Havasu City, AZ
3
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Accelerated depreciation on primary residence turned STR?

Larry King
  • Lake Havasu City, AZ
Posted

We are planning to turn our primary residence into an STR at the end of this year and are looking to take advantage of accelerated depreciation if we can meet the REPS requirements. To my knowledge I believe this is possible with a property purchased as an investment property, but would it apply to a primary residence turned investment property?

We absolutely plan on meeting with a tax professional to plan this out, but I’m curious if this is even possible before we push to that next step. Any feedback is appreciated, thanks!

  • Larry King
  • Most Popular Reply

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    Michael Plaks
    #1 Tax, SDIRAs & Cost Segregation Contributor
    • Tax Accountant / Enrolled Agent
    • Houston, TX
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    Michael Plaks
    #1 Tax, SDIRAs & Cost Segregation Contributor
    • Tax Accountant / Enrolled Agent
    • Houston, TX
    Replied

    @Larry King

    Real estate professional status has nothing to do with STRs. You need to pass "material participation" test and personal use test, but that's for your future tax professional to explain.

    Yes, bonus depreciation is possible, but only on the current value of the personal property and land improvements. For example, the current value of your fence in its current condition, not its original cost. 

    You can also apply bonus depreciation to some additional upgrades to  your property. Again, I will leave the details to your tax pro.

  • Michael Plaks
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