Cost Seg and bonus depreciation question
Hey guys,
I'm thinking about buying a new construction $315,000 property (1,200 sqft) to do a STR. I do qualify as a real estate professional. Can anyone give me a ballpark idea of my potential tax savings if I do a cost seg plus having the 100% bonus depreciation back in place? Thanks so much in advance!
Most Popular Reply
Speaking from my experience as a real estate professional, real estate investor, and mortgage broker, a setup like this can produce a significant tax advantage when you combine STR material participation with a cost segregation study and 100% bonus depreciation.
On a $315,000 new construction property, once you remove the land value, your building basis is realistically in the $250K–$270K range. In both my own investments and the cost seg studies I’ve reviewed for clients and borrowers, properties in this price range typically see 20%–30% of the structure reclassified into 5-, 7-, and 15-year property.
That positions you for roughly $50K–$80K of bonus-eligible depreciation in Year 1.
Your actual tax savings depend on your bracket, but here’s a realistic range based on what I’ve seen:
• At 24%: around $12K
• At 32%: about $18K–$22K
• At 35%–37%: closer to $28K–$30K
In every STR acquisition I've analyzed—whether for my own deals or clients I help finance—the outcome is consistent: when you qualify as a Real Estate Professional and meet material participation, it's very common to walk away with five-figure tax savings in Year 1, often $15K–$30K+.
Just make sure the STR meets material participation rules and get a proper engineering-based cost segregation study to confirm the exact numbers. But based on how this deal is structured, you're positioned for a substantial first-year tax benefit.
— Ebonie Beaco | Mortgage Loan Originator | NMLS 2389954