Tax Help- Tis the season

Member since 2024 · 2 posts · 5 votes

Hi all- Looking for some guidance. I purchased my first duplex rental property in July of this year and am currently house hacking.
In the past, come tax season, I've used turbotax and it's done the trick. I'm thinking this year it might be beneficial to pay some good money for a professional?

I specifically ask because I'm not as well versed in the realm of cost segregation/depreciation as I'd like to be. Chatgpt says it's worth it to pay the money the first year so a CPA can set up a 'depreciation schedule' and be set moving forward. I could also be worried about the wrong things.

I've ony received 3 rent payments by now if that makes a difference, but have been living at the property since October or so.

Any advice would be appreciated. Thanks,

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Christopher Tile

Accountant · Long Island, NY · Member since 2021 · 184 posts · 148 votes

8mo

Quote from @Carson Vanderhoff:

I've ony received 3 rent payments by now if that makes a difference, but have been living at the property since October or so.

Any advice would be appreciated. Thanks,

Congrats on the duplex/house hack! Working with a real estate CPA (plenty on this forum) can really pay off. Not just to file, but to set everything up correctly.

Because you’re living in one unit and renting the other, you need the right expense split (personal vs rental) and a proper depreciation schedule from day one. That foundation makes future tax years way easier and helps you avoid costly mistakes.

Cost seg might help, but it’s not always necessary. Working with a CPA that specializes in real estate can quickly tell you if it’s worth it for your specific situation.

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Christopher Tile
Accountant · Long Island, NY · Member since 2021 · 184 posts · 148 votes
8mo
Quote from @Carson Vanderhoff:

Hi all- Looking for some guidance. I purchased my first duplex rental property in July of this year and am currently house hacking.
In the past, come tax season, I've used turbotax and it's done the trick. I'm thinking this year it might be beneficial to pay some good money for a professional?
I specifically ask because I'm not as well versed in the realm of cost segregation/depreciation as I'd like to be. Chatgpt says it's worth it to pay the money the first year so a CPA can set up a 'depreciation schedule' and be set moving forward. I could also be worried about the wrong things.
I've ony received 3 rent payments by now if that makes a difference, but have been living at the property since October or so.
Any advice would be appreciated. Thanks,

Congrats on the duplex/house hack! Working with a real estate CPA (plenty on this forum) can really pay off. Not just to file, but to set everything up correctly.

Because you’re living in one unit and renting the other, you need the right expense split (personal vs rental) and a proper depreciation schedule from day one. That foundation makes future tax years way easier and helps you avoid costly mistakes.

Cost seg might help, but it’s not always necessary. Working with a CPA that specializes in real estate can quickly tell you if it’s worth it for your specific situation.
2 Reply
Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
8mo
Quote from @Carson Vanderhoff:

Hi all- Looking for some guidance. I purchased my first duplex rental property in July of this year and am currently house hacking.
In the past, come tax season, I've used turbotax and it's done the trick. I'm thinking this year it might be beneficial to pay some good money for a professional?
I specifically ask because I'm not as well versed in the realm of cost segregation/depreciation as I'd like to be. Chatgpt says it's worth it to pay the money the first year so a CPA can set up a 'depreciation schedule' and be set moving forward. I could also be worried about the wrong things.
I've ony received 3 rent payments by now if that makes a difference, but have been living at the property since October or so.
Any advice would be appreciated. Thanks,

"Any advice would be appreciated" should specifically exclude ChatGPT. He is the worst tax advisor ever. OK, 2nd worst, right behind Grant Cardone.
Don't pursue cost segregation until you know whether it will help you. It may, and it may not. Here is an article giving some basics, but it's not enough to draw conclusions in your particular situation.
https://www.biggerpockets.com/forums/51/topics/1075919-five-...
And, even before that, it helps to understand depreciation:
https://www.biggerpockets.com/forums/51/topics/1121063-expla...
There are many tax professionals on this forum. You can reach any of us for more help.

1 Reply
Eduardo Perez-Borroto
Accountant · Columbus, OH · Member since 2024 · 27 posts · 19 votes
8mo
Hi Carson,

Congratulations on the new home!

There are special considerations when house hacking. It would surely be worth investing in a seasoned tax professional.

I'm happy to answer any questions you may have.
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Austin L. Smith
Accountant · NV · Member since 2024 · 39 posts · 25 votes
8mo
Hey Carson,
It's very good that you have acknowledged the aspect of depreciation. When you go and sell the property, you will be selling a section 1231 property (property used in trade or business or held for more than 1 year).
You will then have to consider section 1245 and 1250 depreciation recapture. The depreciation recapture will be based on depreciation "allowable". So, if a taxpayer accidentally forgo's depreciation, they would still be subject to the recapture.
It is also a good idea to use a professional since this is a mixed use property. As others have said cost segregation should be considered, but
its not a good idea to assume it will result in benefits before doing any preliminary analysis.
Good luck in your search! I hope this information helps in your search.
1 Reply
Aaron ZimmermanBusiness Member
Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
8mo
The biggest things to get right in the first year of ownership are going to be getting the basis of the property right, making an appropriate split between building and land, and then getting rental (deductible) and personal (mostly non deductible except for taxes, mortgage interest on schedule a). It's nice to have the piece of mind that everything is being done properly.
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Bill HamptonBusiness Member
Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 978 votes
8mo
@Carson Vanderhoff
Congratulations on your first property.
Since you are house hacking, part of your property will qualify for business deductions and part will qualify for personal deductions.
A cost segregation may or may not benefit you.
I recommend finding an accountant who specializes in real estate taxation and is proactive instead of reactive when providing advice.

Working remotely with your accountant will expand your options. The best person for the job may not be local.

I would also recommend looking for an accountant who will work with you throughout the year. You want an accountant who can help you strategize and who is responsive when you want to know the consequences of the financial decisions you are making throughout the year.

Happy to answer any questions. Good luck.
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Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
8mo
Congrats on your house hack and getting in the game!
There is SO much misunderstanding on how a cost seg works and if you should use one. The bottom line- unless you make LOTS of money- say at least $150K as a single person, AND you can qualify in some way as a real estate professional, it's likely not an option for you.
That doesn't mean you don't get tax benefits or depreciation, you just get them over a longer time frame, which is actually better if you have a "normal" income.
Never hurts to talk to actual tax pro, which I am not, but with one rental and standard income, I actually think TurboTax with the rental property add on is a pretty good product. Your situation isn't as complicated as it might feel and you won't be leaving thousands of dollars on the table.
Best of luck!
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Jose OrtizBusiness Member
Accountant · South Florida · Member since 2026 · 47 posts · 18 votes
8mo
Hi Carson...

You don’t need a CPA just because you bought a duplex. TurboTax can still handle a basic rental. Where pros add value is when there are decisions, not data entry.

Cost segregation is usually overkill for a small duplex, especially one you just started renting and are partially living in. It’s not something you do “because it’s year one” - it only makes sense when the numbers justify the cost and complexity.

Depreciation does matter, but you don’t need anything fancy to “set it up.” Once the property is placed in service, depreciation starts automatically. You can elect straight-line now and still catch up later if you ever do cost seg ... you’re not locking yourself out.

Only having a few rent payments isn’t a problem. What does matter is the date each unit was placed in service and the fact that part of the property is personal-use since you’re house hacking. That’s where people mess things up if they’re DIY’ing without understanding the split.

So If you want maximum confidence and zero second-guessing, a CPA is worth it this year just to get the foundation right.
If the numbers are small and you’re comfortable learning, TurboTax can work - just be careful with the personal vs rental allocation.
Cost seg can wait but a clean setup can’t.

I commend you for asking the right questions early... that’s the bigger win than any single tax move.
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Jason MalabuteBusiness Member
Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 906 votes
8mo
Congrats on your first property. Since you’re house hacking, part of the property will qualify for business deductions while the portion you live in will be treated as personal. Getting the basics right early is critical—properly establishing your cost basis, allocating between land and building, and correctly splitting personal versus rental expenses.

A cost segregation study may or may not make sense in your situation, so it needs to be evaluated specifically rather than assumed. I strongly recommend working with an accountant who specializes in real estate, is proactive instead of reactive, and is willing to help you plan throughout the year—not just file a return. Working remotely also opens up better options, since the best fit doesn’t have to be local.
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