Short-Term & Vacation Rental Discussions

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STR with duplex for tax benefits

Posted Jul 31 2022, 21:46

Hi, I recently purchased a duplex where I've had to renovate and repair a good amount. I cant get REPS status but wanted to take advantage of the tax benefits of bonus depreciation. Is it possible to rent one side of the duplex as LTR and the other side as a STR and get the benefit of cost segregation and bonus depreciation through the STR? (Most of the renovations were on one side that would be used as STR).

Atlanta, Georgia

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James Kim
  • Accountant
  • Los Angeles
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James Kim
  • Accountant
  • Los Angeles
Replied Aug 1 2022, 01:34

Arthur,

for tax purposes you generally won't be able to combine your STR with LTR benefits. Basically you can't take the LTR benefit by trying to loop it into your STR, that's the general rule. For your purpose you'll have to segregate your duplex into two pieces, your STR and LTR and keep track of each separately for tax and treat each as such. Unfortunately if you can't get REPS then your LTR is going to stay passive. Hope this helps.

disclaimer : anything mentioned should not be relied on as advice and you should still consult your own cpa.

James

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Olivia Leija
  • Rental Property Investor
  • Weslaco, TX
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Olivia Leija
  • Rental Property Investor
  • Weslaco, TX
Replied Aug 1 2022, 01:45

Hello Arthur,

I converted a 4-plex that was originally long-term rentals into short-term rentals this year.  I am wondering the same thing.