STR Bonus Depreciation Strategy

[Lily Tang]

Currently in the market shopping for a home that has Airbnb / STR potential to be put in service for 2025. I will be materially participating to qualify for the 100hr+ rule to claim a few of the tax benefits through cost segregation/bonus depreciation to offset my W2 income. This home should also have good mid-term rental and long term rental to maximize flexibility after 2025 tax year. The tax savings would be significant to offset my W2 and I'm already running numbers to make sure future years cashflow can offset or be higher than monthly costs. Located in Seattle.

I'm planning to fund the purchase through cash for 20% down / closing costs but plan to use HELOC on existing primary home (based in another city) to fund STR related furnishings & upgrades. My understanding is I can deduce the interest on HELOC based on its usage for STR.

I'm very new to this and have always been passionate about RE investing & going down RE route. Anything else I need to consider? Also looking for a RE-focused CPA if anyone has recommendations.

[Bill Hampton]

@Lily Tang

You came to the right place. Bigger Pockets is a great place to find an accountant specializing in real estate taxation.

A good real estate accountant can save you thousands of dollars by leveraging entity selection and formation, tax deductions, cost segregations, bonus depreciation, 1031 exchanges, and tax planning.

I recommend finding an accountant specializing in real estate taxation, business taxation, financial planning, and tax planning.

Consider working with your accountant remotely to expand your options.

I would also recommend looking for an accountant willing to 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.

Good luck.