Cost Segregation Losses - STR

[Gerhard Maree]

Let's say you do a cost segregation study on a short term rental and with bonus depreciation you have a loss of $100,000. 

Does that roll over as a credit for future income or do the IRS actually send you a check? 

[James Parrish]

A cost segregation study increases your depreciation expense which reduces your net income, that is where the tax savings come from. It's not a refundable tax credit that will generate a check from the treasury. An NOL created by a cost segregation study, however, can be carried forward and used in the future in the same manner. In any event, it's best to consult your CPA due to specific rules and limitations. Hope this helps!