Quote from @Michael Plaks:
Quote from @Sharry W.:
I did cost segregation later last year for my STR. Could I stop my contribution for Federal income tax this year, because 100% bonus depreciation will cover my next few year's income taxes? Therefore, it frees up that money to be invested somewhere else.
Need to make sure first that you can use cost segregation the way you plan to. This can only be determined by a competent tax accountant after examining your situation. This strategy has its complications, and you may not be aware of them. Material participation test is one, timing of placing the property in service is another one.
If you're in a position to apply cost segregation, your taxes will be wiped out for last year (2022) and not for this year, 2023. You should not be stopping your payroll withholdings for 2023. You should do your 2022 taxes asap, get a 2022 refund and use it for investing. But keep your 2023 payroll as is, because costs segregation will not reduce your 2023 taxes, unless you buy another STR this year and do another cost segregation.
Thank you reply back on my message. I am planning to do my 2022 taxes asap. Your message mentioned a 2022 refund, does that means I will get back my federal income tax contribution that year?
Another thought, If my first year of bonus depreciation is more than enough to cover the first year of taxes. I would still spread out this bonus depreciation during the first 1~5 years, as long as I am going to meet the material participation in each year, right?
