Bonus Depreciation to Offset Cap Gains

[Jenn Rees]

Can anyone with knowledge of bonus depreciation weigh in on a scenario I’m piecing together? I have a call scheduled Monday to discuss a cost seg but would love a little more insight before that meeting.

We will be closing sale on a few RV parks in October. The cap gains will be over 300k. I would like to purchase a 2-2.5 mil home with the proceeds that will eventually be our primary, but that we could buy initially as a second home/investment and rent out for the remainder of 2024. My understanding is bonus depreciation is not prorated therefore as long as we rent the home before Dec. 31 of this year it would fully qualify. Are we able to take bonus depreciation on the home sale to offset the cap gains?

If so, is there a limit to how long we must hold the home as an investment property before we can move in and convert it to a primary?

I’m pretty ignorant to how bonus depreciation works- is there a way to calculate how much of the 300k capital gains tax we could offset with a 2+ mil purchase?

TIA for sharing your wisdom!

[Greg Scott]

This is one of those situations where it is best to say, you would be foolish not to hire a CPA to give you correct advice with 100% view of your entire portfolio.  

I will say that the odds this scheme works in your favor is very limited.