Accelerated bonus depreciation for short term rental then switch to long term rental

[Roger Pearce]

I'm looking for some expertise from STR landlords or accountants. I came into an extra $200K this year! The problem is it's going to be taxed as W-2 earnings. I only have long-term rentals and a full-time job so I come nowhere close to qualifying as a real estate professional and all my losses are passive. I realized the other day that maybe I could buy a house to use as an STR, spend 100 hours fixing it up and staging it, and perhaps manage to get a few guests before the end of the year. Then I could accelerate bonus depreciate (at 80% for 2023) hopefully about 1/4 of the amount I pay for the house. A $450K house should give me about $112K of depreciation for this year, which I can deduct from the extra $200K of active income I made this year. At a 35% tax bracket, that should save me about $39K in taxes. If I put down $150K on this house my mortgage payments on my $300K loan would be about $38K. This means that even if no one rents my house for the whole of next year the only money I will be out of pocket would be Insurance, taxes, and whatever it costs me to furnish the place.

Am I correct? I know my numbers are ballpark, but should I assume differently? Is it OK that the house will only be available as an STR for probably less than a month of 2023 and still claim accelerated bonus depreciation?

Part 2...

How long does it need to be a STR in order to legitimately claim accelerated bonus depreciation? Can I switch it to a furnished long term rental January 1st and not owe the IRS the money I saved on taxes in 2023?

Thanks in advance for your help and advice.

Roger