All Forum Posts by: Mayank Jain

Hey everyone,

If I live in a Single Family Residence and put it up for STR for a few weeks in the year to qualify for STR tax loophole (Avg 7 days rental + show 100 hours of my participation + showcase my material participation), can I deduct relevant STR related expenses + depreciate my property via cost segregation study as if the entire house is being used for STR?

The intention is to lower my cost of ownership for my primary residence. Any cashflow from STR is a bonus on top.

Does this plan seem logical?

Thanks

 Hi Ashish, thanks for helping out with a response.

Hypothetically, lets say I don't want to bonus depreciate, but want to use the depreciation to its full number of years.

If I understood your response correctly, you are saying that after the depreciation years are completed (say 5 years completed for the 5 year bucket), their depreciation value is 0?

Thanks!

Hey folks, 

I have a fun question on cost segregation study, around which I am trying to build a house hack thesis.

Scenario
Lets say, we have a $1M property ==> Building cost : $800k, land cost : $200k

Now we do a cost segregation study, with following outcome
- $100,000 of interior fixtures and finishes that can be depreciated over 5 years
- $100,000 of interior fixtures that can be depreciated over 7 years
- $100,000 of land improvements that can be depreciated over 15 years

Using a straight line depreciation on cost segregation data, we get
- Building ($500,000 / 27.5 years): $18k
- 5-year property bucket ($100,000 / 5 years): $20k
- 7-year property bucket ($100,000 / 7 years): $14k
- 15-year property bucket ($100,000 / 15 years): $5k

Total first-year depreciation : $57k

Questions
- Do my 5, 7, 15 year property materials cease to provide depreciation after their relevant cost segregation depreciation period is over? (For example in Year 6, I cannot use any depreciation from 5 year bucket)?
- After year 15, am I just depreciating the building?
- Is the attached screenshot a correct way to understand the cost segregation study?
- Is cost segregation study performed only once in year-1 and its values used over and over until 29.5 yrs OR can I perform the study every year? Does it even make sense to perform every year if there's no material change in artifacts used in 5/7/15 yr buckets?

Many thanks!

May I add to this question - what is an analytical way to narrow down which market to invest in? Word of mouth recommendations are great - but is there a more analytical way to do this? Like generate a list of areas, narrow down & finalize?

Thanks!

I see, thank you both for sharing more info. 

@Michael Plaks : the point you mentioned about STR-B inheriting STR-A's tax attributes was probably the information I was missing.

Cheers!

Hi everyone, I'm a rookie, trying to validate the following hypothesis...

To offset W2 income, buy an STR (have rentals of avg 7 days or less + use my 100+ hrs/yr to manage property) THEN use cost segregation + depreciation as an active loss on W2 and THEN sell the property through a 1031 exchange and repeat every year.

Does this seem logical? Is there any obvious point that I'm missing?

I know this looks like the tax tail wagging the investor, but I would still love to know.

Thank you!