Should I add an STR(s) to my LTR business to take advantage of the STR Tax loophole?

[Sam Hudacek]

Hey BP! I currently own a couple multi-family properties that are all LTRs and work a full time 6-figure job, so becoming an RE pro is almost impossible. I max out the $25k to offset my W2 under passive activity rules (as its slowly phased out for me).

That being said, would it be beneficial for me to buy one or two STRs primarily for the purpose of being able to offset my W2 income? (providing I meet all the criteria). If they were the right land/building ratio and made sense to do a cost seg/bonus depreciation, could I potentially offset my entire W2 salary? If I owned several LTRs and STRs, I'm under the assumption those two would not mix when it comes to depreciation and tax deductions because one would be active vs passive?

Hopefully these questions make sense, and I'm open to suggestions on more tax savings, thanks!

[AJ Wong]

HI Sam. We've helped several high W-2 wage earners take advantage of the STR tax 'incentive,' here on the OR Coast. I would probably focus on a single STR (if that was the route you went) and find something of slightly higher value for a larger proportion of accelerated depreciation.

One way to look at it, is that the monies you would have paid in taxes could essentially be a down payment if structured favorably. Similar to a 'high gross weight' vehicle deduction. If you're paying anyway..might as well get a G Wagon, or in this case a STR out of it. lol

Check in with me if you'd like to explore OR, I work with a lot of absentee investors from your region. Also check with @Joseph Chiofalo for some further STR investor loan programs and he has a close tax rep we work with. Good luck!