Cost Segregation Study Question

[Jordan Elledge]

Hello All,

I know with the One Big Beautiful Bill "OB3", the depreciation has gone back to 100%. I am having a hard time finding a clear answer for my situation. I purchased a 2bd 1ba cabin in June 2024. We had to do a good amount of work to get it up and running as a STR. It has all new appliances including a new furnace. We filed our 2024 taxes, and did get some of the depreciation.

Can you do a cost segregation in the year after you purchase? If so, would it require me refilling all of my 2024 taxes? Also what depreciation percentage would I be allowed to capture?

Thanks,
Jordan Elledge

[James Carlson]

No CPA here, but ... 

My understanding is that you can do retroactive cost segregations, but that you only get the bonus depreciation at the rate that existed at that time.

Bonus depreciation was sunsetting last year, so I believe it was at 40% or 60%. So that's what you are eligible for.

Now, this is not your situation, but the new law does allow anyone who bought in 2025 and started operating an STR, even before passage of the bill, to get the full 100% bonus depreciation. I have several Colorado STR clients who closed on vacation rentals earlier this year that will be taking advantage of this.

Of course, talk to a CPA for the most accurate answers. Good luck.