Bonus Depreciation Advice

[Elle Bindra]

Hello Bigger Pockets community,

Need some advice/recommendation.

I am about to undertake two rehab projects - first one would be an Airbnb rental and the other would have annual residential leases.

Both properties have varying degrees of work but will need: new roof(s), front- and back-porches, remodeled and refaced kitchens and bathrooms, new floors, plumbing, HVAC , etc.

Questions:

1. I am told that we could use Section 179 to deduct some of the expenses from the Airbnb property so long as we don't create a loss
2. I have a peripheral understanding of Bonus Depreciation - but looking for guidance on how this would work and what would both of these properties qualify for the deduction and at what amortization schedule [year 1 or longer]?

Thank you much for your advice and introductions in advance.

[Ashish Acharya]

Originally posted by @Elle Bindra:

Hello Bigger Pockets community,

Need some advice/recommendation.

I am about to undertake two rehab projects - first one would be an Airbnb rental and the other would have annual residential leases.

Both properties have varying degrees of work but will need: new roof(s), front- and back-porches, remodeled and refaced kitchens and bathrooms, new floors, plumbing, HVAC , etc.

Questions:

1. I am told that we could use Section 179 to deduct some of the expenses from the Airbnb property so long as we don't create a loss
2. I have a peripheral understanding of Bonus Depreciation - but looking for guidance on how this would work and what would both of these properties qualify for the deduction and at what amortization schedule [year 1 or longer]?

Thank you much for your advice and introductions in advance.

 1) if you don’t have a regarded entity(partnership or Corp), then you can use sec 179 even though you have a net loss. Your W- 2 or other income can allow you to use sec 179. 

2) don’t want to get technical here but if life of your asset is less than 20 years, it can be bonused. 
But there so many exceptions. not every thing cannot be bonused, such as your roof. 

Also depending on timing, no my everything have to be capitalized, you can just expense it. 

Your tax advisor will have to help you all the detail.