Material Participation on STR purchased late in year

[Salah Dajani]

Most of us are aware of the potential tax benefits with owning a STR and some of the rules regarding material participation. I was wondering if you purchase an STR in December and perform a cost segregation study and continue renting it out and managing it, will this count as material participation and allow you to utilize the bonus depreciation?

Or will the prior owner be considered as someone who spent more time working on the property and therefore make you ineligible for material participation? Let's discuss!