Accelerated Depreciation on SFH

[Joe Wood]

Hey guys,

I understand that with a residential rental property, we are able to depreciate the house, not land for 27.5 years. My accountant told me that he would be able to accelerate the depreciation up front during the first year of purchase in order to avoid a huge tax bill from when I withdrawal from my IRA.

Is anyone familiar with this? Am I able to depreciate the the entire house up front or is it over a few years? I'm awaiting a response from my accountant but definitely would like to hear what fellow BP members have to say.. thanks!

[Michael Plaks]

@Joe Wood

On a SFH, a professional cost segregation study is usually cost-prohibitive. You or your accountant are allowed to segregate assets without such comprehensive study. The risk is that the IRS might challenge your allocations, and you will have to prove them.

The IRS does not challenge professional cost segregation studies, but like I already said - they are not worth it for SFHs.

As to your ability to have a large 1st year deduction with cost segregation - certainly possible.