Cost segregation pros/cons on condo?

[Perrin Hickey]

Hi all! Newbie here….Wondering about the pros/cons for cost segregation. Purchasing our first STR, a 2/2 ski condo for over 400k. We got hammered in taxes last year due to our W2 income, so looking for ways to offset. Being our first setup, and being late fall, I have 100+ hours in material participation, which I assume will benefit us as well. Thank you for any and all insight!

[Michael Baum]

Hey @Perrin Hickey. So I am not a CPA or attorney but here is my gut on the condo.

When doing a cost segregation study it takes into account all aspects of a property and adjusts the depreciation. With a SFH you have the surrounding property improvements, black top, etc and of course the interior fixtures, flooring etc.

With a condo, you will get no land improvements and will be limited to structural improvements as well. The roof for example. You will get charged a special assessment for that but I don't know if that would count toward the study as you don't own it and didn't pay for the whole thing.

You are really going to have to talk to an expert on this topic. I do know that it will benefit you more if you bought it after Sept of 2017. This is the last year for a full 100% benefit. It changes to 80% then decreases by 20% each year until it is phased out.

You can do a look back as well and claim the resulting write-offs without amending prior-year tax returns.

Again, consult a pro on this asap.