Co-signer Bonus Depreciation

[Michael Dallas]

Hey I am a D1 collegiate baseball player at Jacksonville State in Alabama. I am looking at buying a 4 bed house to house hack and rent the other rooms to my teammates. Since I do not have any income I am having my dad co-sign on the loan with me. I will be bringing all the money for the down payment and closing cost so he is not financially invested into the property. What I was wondering is, is he allowed to take bonus depreciation from the property if I get a cost segregation study done? He has a very good paying W2 job and that would help him with taxes tremendously. Since I have no income it makes no sense for me to attempt to take bonus depreciation. I wasn’t clear on the tax rules since he is just co-signing and not actually investing in the property. Thank yall so much for taking the time to help me!!

[Ryan Thomson]

@Michael Dallas really smart idea to house hack! I wish I was thinking like you when I was your age living in Colorado Springs. 

As far as cost segregation goes:

1. I don't believe you can do that when its your primary home. When you are house hacking you could cost seg but only the percentage of the property that is a rental. I don't think it'd be worth it until you move out AND if you are considered a "real estate professional" by the IRS. 

2. If your Dad doesn't meet the "real estate profession" status criteria,  I don't think he will be able to use the cost seg study to reduce his w2 taxes. It only reduces the property income or other real estate-related income.