First Rental Property | Need to Lower Taxes

[Renee Mills]

Hi all. My husband and I are just starting out in our real estate investment journey. We just set up our LLC and are starting to look for our first property. The goal initially is to lower our taxes, so looking for a short term rental and to write off depreciation.

Based on my reading, we must have a property “ready” to rent, not necessarily rented to do that cost segregation.  Can someone give me some additional high level info on that.  I’d love to save on taxes for 2025, but worried it’s too late in the year to find a property, close, and have it ready to rent by the end of the year.  Any info is appreciated for this newbie!  

[Denise Supplee]

Hi @Renee Mills you're right, that to take bonus depreciation through a cost segregation study, the property needs to be placed in service. Meaning it's ready and available to rent, even if it's not actually rented yet. That includes furnishing and any setup needed for a short-term rental. It's not too late in the year, but timing is tight, so you'd need to find and close on a property soon, then get it rent-ready before December 31. If you're serious about capturing the 2025 tax benefits, connect with a CPA experienced in cost seg as soon as possible, they can help guide you through the timing and requirements based on your specific situation.