Assets identified in this study include:Building systems: water heater, electrical distribution, HVAC, plumbinPermanent Fixtures: windows, doors, bathroom fixturesStructural Components: Roof construction, drywall, wood framingInterior Construction: Wood flooring, stairs, ceramic tileThis engineering-based cost segregation study included the following methodology:Physical Inspection through a site visitDocumentation review including architectural plans, accounting records and construction documentsA cost analysis which utilizes engineering principles in order to allocate costs to their applicable asset classificationsCalculation of the depreciation schedule using MACRSAs a reminder, bonus depreciation started to phase out in 2023.

When it comes to acquiring lucrative coastal luxury vacation rentals on the Oregon Coast the most challenging components can be permitting and timing. 

Bonus depreciation is just a special part of the US tax code.It allows you to take accelerated depreciation on portions of your property depending on when an asset is put into service.At the time of this writing, you can write off a huge portion (60% in 2024) of many qualified components that have a useful lifespan of 15 years or less.That means a certain percentage of things like landscaping, sidewalks, latches, appliances, fences, certain flooring, etc is depreciable in year 1.The bonus depreciation rate percentage changes yearly depending on the administration and the tax code.For years 2015 through 2017 first-year depreciation for all the items on a 15-year schedule or less was set to 50%.It was scheduled to go down to 40% in 2018 and 30% in 2019 and then 0% in 2020.But then Trump got elected, and he enacted the Tax Cuts and Jobs Act.That moved the bonus depreciation percentage to 100% from 2017 to 2022.In 2023 it went down to 80% and it’s currently at 60%.Depending on who gets elected again, 100% may be back on the table.Only time will tell.We know that the US government wants to incentivize more development and ownership of RE.They want Americans to continue to build and maintain our physical world.That’s why real estate is one of the most tax-advantaged assets in the US.Depreciation and bonus depreciation for RE are very positive and will likely continue in the years ahead.

You might also consider using cost segregation to accelerate depreciation on certain components of the property, especially given the significant rehab costs.

It involves using Section 179 or bonus depreciation, and I would not DIY this project, as distinction between repairs and capital improvements is one of the most confusing areas of the tax law.And no, you do not need a cost segregation study to deduct these components of your rehab - if you have itemized invoices and receipts.Myth 8: for a valid 1031 exchange, I must exchange STR for another STRNo, you don't.

Now all of a sudden you have these new cabin units and you can significantly reduce your tax bill at least in the near term by splitting out the components.

Fortunately they don't have to--for people who purchase the book directly from BP here, they get free bonus content and one component of that is a list of 72 questions to ask a sponsor.Someone will read this and think I'm just trying to sell books--not the case. 

It is also not something that I am "all-in" on and its a component of our portfolio.

A 5 year life span component will have a higher deduction is year 2 than year 5.

You list out all components.