Cost segregation and bonus depreciation

[Megan OConnor]

I’m looking for insight from  y’all that are familiar with cost seg and bonus depreciation. 

This year we will STR our primary home for 5-6 months. Our town only allows STR if it's your primary (so max 6m minus one day). We purchased the home in 2020 and did a full gut renovation this year (06/2025-06/2026). It's listed and booking well. We are moving into a MTR for Sept-Nov this year while it is STR. We pay approx $75k in income tax. Are we able to do a cost seg and take bonus depreciation since it's our primary? How does this complicate the process?

Looking for a CPA, but in the meantime I am curious what education you all can provide. 

Thank you, 

Megan

[Julius Vincent]

Hi @Megan OConnor - you can cost seg any building, but with your dynamics the bonus depreciation probably won't achieve what you're hoping. Since the home is your primary residence and your personal use days are far above the 14 day threshold, the vacation home rules apply. Those rules unfortunately cap your rental deductions at your rental income. 

A cost seg can help wipe out the tax on the STR income itself, which is worth something, but it cannot create a loss that offsets W-2 income or the rest of that $75k. Unused deductions carry forward. And the rules apply deductions in a set order with depreciation last, behind mortgage interest, property taxes, and operating expenses. So in practice, a big chunk of the accelerated depreciation just sits as carryforward.