Rehab and cost seg

[Laura Parra]

If I buy a property now with the intention of using it as a self-managed STR, then rehab it and get a cost seg study done, will that cost seg reflect all the improvements I have made to the property since buying it? My thought is to add value to the property to try to increase how much I can claim for bonus depreciation. Thanks!

[Kate Stoermer]

The cost seg will reflect the building and improvements that exist at the time the study is done; you can do a study at any time during ownership, but only once. 

Improvements to the building itself will increase your depreciation value regardless. You just need to keep good records so your CPA can correctly discern what improvements will impact the cost basis.   "Adding value" for bonus depreciation is about investing in capital improvements with a <20 lifespan.  Structural changes won't do that, but landscaping, concrete, even appliances and higher end furnishings will.  Talk to your accountant about what you are planning to make sure things align with your goals.  Its a great tool.  And remember - all that depreciation gets recaptured at sale unless you role it into another investment.