Questions re cost segregation study for STR

[Nicole Cotrino]

My spouse and I purchased a cabin in November 2023 as a STR and started renting it out in March of this year. I've been hearing a lot about cost segregation studies and have a few questions…

- What are some of the key factors that determine whether a cost segregation study makes sense? (I’m still trying to understand the basics!)

- We are going to start searching for a CPA with a lot of experience in STRs, but haven't found one yet. Would the best first step be to find a good STR CPA or to first focus on finding a good cost segregation firm?

- Will we substantially diminish the benefits of a cost segregation study if we don’t get it done before the end of the year?

- Any recommendations on how to vet CPAs and cost segregation firms? Or, any suggestions on specific companies to use? 

Thank you!

[Nicole Cotrino]

Thank you both for the feedback! We will be showing material participation so that we can deduct from our W2 employment. My understanding is that one of the ways we can do that is to show that we spent 100+ hours actively working on, or managing, the property - and that our time working on it exceed the amount of time any other person spent working on it. Does it have to be 100+ hours for one of us individually, or can it be 100+ hours for my spouse and I combined? Also, and thoughts on how detailed our documentation of the time spent needs to be? Of course we will ask these questions to our CPA as well, but would really love any feedback. Thanks again!