Real estate professional tax question

[Dennis McHugh]

Hello,

I have a question about a strategy. Can you buy a house in an "Opportunity zone", rent it short term for the rest of the year. Get 100 hours of participation to become a real estate professional. Bonus depreciate it at 60% minus 25% for the land. Then the following year rent it long term for 10 years and sell it for no bonus depreciation recapture? "Because if you hold a property in a opportunity zone for 10 years you don't have to pay your bonus depreciation back? Would that work or no?

[Ashish Acharya]

Your strategy has potential, but it won’t eliminate depreciation recapture. To qualify for Real Estate Professional Status, you need 750 hours of participation, not just 100. Bonus depreciation is allowed but subject to recapture upon sale. Opportunity Zone benefits apply to capital gains, not depreciation recapture unless held in a Qualified Opportunity Fund (QOF).

*This post does not create an attorney-client or CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.