A cost segregation study was performed on this apartment building in Knoxville, TN with a depreciable cost basis of $17,323,250.

This could be a game-changer for many investors in Los Angeles and California.

Hope this helps, and good luck with your next deal!

After I posted this.

Does this strategy make sense, or am I overlooking any potential pitfalls?

What made you interested in investing in this type of deal?

Quote from @Melanie Baldridge: In 2025 the bonus depreciation rate is 40%.This means that if you bought a property for $1M in 2025, did a cost seg study and found $300K in eligible assets that you could depreciate, you could take 40% of that $300K as bonus depreciation to offset your income in the first year.40% of $300K = $120K.You then apply that $120K to the owner’s personal tax rate to find the final amount that they can defer in year 1.If your tax rate is 37%, you can defer $66.6K.This is a big deal even at the 40% bonus depreciation rate this year.It’s a massive benefit 

Figure rates are significantly higher doing this instead of the more straight forward approach.  

This can complicate claims payments for the named insured/tenant. 

This is more about inventory and not STR returns.