As we flipped this ourselves from the roof to the flooring, we gained much respect to labor workers and realized even the tidiest things such as changing the outlet covers and installing new plumbing will take up a lot of time!

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.

Make sure your flooring can withstand pee, spilled beer, spilled juice, blood etc...

To give more context Unit 1 (1st floor - 5/2), Unit 2 (2nd floor - 3/1) and Unit 3 (3rd floor / attic - 1/1).Would it be possible to create 1 rental lease agreement for Unit 2 + Unit 3 together, and rent independent rooms at different prices?

That's what you will fall to when you fail, the higher that floor is the more room you have to succeed.

@Stuart I thought home improvements like flooring, bath updates, appliance updates under the name of a LLC help to offset W2 income besides the liability part?

I have a big garage that has electricity and plumbing already and has a second floor.

Updated kitchen, bath, floor, appliances, paint, backyard.

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.

Floor rate is currently 5.25% with a large buydown.