Cost segregation strategy for LTR/STR mixed use MFH

[Reaz H.]

I am exploring STR as a strategy to use accelerated depreciation to offset my W2 income. I am exploring the acquisition of a property that is a SFH but has a couple of ADUs in the same lot. Now ideally I could STR all of the units individually but given this is my first foray into STR, I'd like to set up a couple of these units as LTR and try to AirBnB/Vrbo one of them. Is it possible for me to still pursue my tax strategy with this set up?

[Michael Plaks]

Quote from @Reaz H.:

I am exploring STR as a strategy to use accelerated depreciation to offset my W2 income. I am exploring the acquisition of a property that is a SFH but has a couple of ADUs in the same lot. Now ideally I could STR all of the units individually but given this is my first foray into STR, I'd like to set up a couple of these units as LTR and try to AirBnB/Vrbo one of them. Is it possible for me to still pursue my tax strategy with this set up?

Let's simplify your thinking. You're effectively buying a package of 3 properties. Two of them LTRs, and one STR. You can apply the so-called STR loophole to one of the three properties.

However, you will get the tax benefits based on only that one ADU. If all 3 units are roughly the same value, then you are only getting 1/3 of the total potential benefit.

There's a lot of technicalities I'm intentionally skipping here, to distill the core issue.