Short-Term & Vacation Rental Discussions

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Kathryn Chapman
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STR- Using Cost Seg in Partnership

Kathryn Chapman
Posted Nov 23 2022, 19:40

My husband and I own a STR with my parents purchased and running this year. We completed a Cost Seg and will have major deductions for 2022. My dad and husband completed the rehab and I manage the bookings- together meeting the 500 hour rule. Does the partnership just need to meet the "material participation" rule for us to take the losses against W2? Are there any rules on how we split the cost benefits or do they just need to add up to the total benefit?

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Leslie Anne Morris#5 Short-Term & Vacation Rental Discussions Contributor
  • Real Estate Agent
  • Smoky Mountains, TN
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Leslie Anne Morris#5 Short-Term & Vacation Rental Discussions Contributor
  • Real Estate Agent
  • Smoky Mountains, TN
Replied Nov 23 2022, 19:48

I would get the guidance of a qualified CPA. I use Ryan Bakke. Learnlikeacpa.com 

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Luke Carl#3 Short-Term & Vacation Rental Discussions Contributor
  • Rental Property Investor
  • Tennessee Florida
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Luke Carl#3 Short-Term & Vacation Rental Discussions Contributor
  • Rental Property Investor
  • Tennessee Florida
Replied Nov 24 2022, 02:09

You should be fine to do what you’re looking to do but you do want to ask someone with a license for this advice. If you’re asking the internet because you asked your CPA and they didn’t know, it’s time for a new CPA. 

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Julio Gonzalez#3 New Member Introductions Contributor
  • Specialist
  • West Palm Beach, FL
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Julio Gonzalez#3 New Member Introductions Contributor
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  • West Palm Beach, FL
Replied Nov 27 2022, 09:49

@Kathryn Chapman Do you have a CPA that specializes in real estate taxation? Real estate has so many tax benefits and credits available, that I always tell people it's crucial to have a CPA that's extremely knowledgeable in this area. This would be an excellent question for them. I have worked with a number of great CPAs over the years and would be more than happy to provide you with recommendations if you'd like?