STR Bonus Depreciation Scenario

[Rick Recker]

We own a lake home that currently serves as our primary residence but is in an area zoned for STR. If we decided to build a new primary residence, then convert existing primary into an STR, putting it into service let's just say on July 1st, exactly halfway through 2026. I'm assuming straight line depreciation would be prorated 50% for the year, but I'm wondering if you're allowed to cost seg and bonus depreciate that property if you have used it for personal use in that calendar year. I'm sure it's been discussed before, and ultimately we would consult our tax professional but just trying to wrap my head around the rules. Thanks everyone.

[Michael Baum]

Hey @Rick Recker, @Henry Clark hit some nails right on the head.

Cost segregation isn't always a slam dunk. Definitely chat with your CPA on this.

Another thing to think about is maybe get the property "on the market" for rentals the first of the year if you can. It doesn't need to be rented but "available" for rental. 

We did something similar and rented it to friends and people we knew in order to do a test run and have them comment on what needs to be fixed or changed.

You should be able to claim the entire year for both cost seg and depreciation.