A cost segregation study was performed on this single family home in Iowa City, Iowa with a depreciable cost basis of $649,900.

Is this normal cost or high?

If this property is hard to rent, or is functionally obsolescent (only 1 bathroom, no yard, etc), or has deferred maintenance that will be costly, or is in a location that is not appealing to Tenants, then maybe a sale would be a good option in favor of a property that has better Tenant appeal, which will likely increase rent and avoid long vacancies in between Tenants.An option to consider....

However, the depreciation claimed while the property was a rental must be accounted for upon the future sale of the personal residence, which could increase your capital gains tax liability.The adjusted basis of the property (original cost minus depreciation) will be used to calculate gains or losses at the time of sale.

They were seeking secondary homes for their family that could be rented to help offset costs and didn't require an immediate or transferrable permit.

JobsOhio projects that, indirectly, approximately 4,500 additional jobs will be created by 2035, further amplifying this effect.Implications for Real Estate DemandThe substantial increase in the workforce will drive demand for both rental and owner-occupied housing.

During this renovation period would you, as the lender, want an Actual Cash Value or Full Repair Cost policy in place?

In a previous post, I discussed the difference in each of the most common cost segregation study approaches.

The costs are just ridiculous though. 

Will a Cost-Seg offset the LTCG on these index funds?