Cost Segregation for Beach House

[Mark Delosreyes]

Should I do a cost segregation study on a short term rental beach house I purchased? Does anyone have experience with this?

[Yonah Weiss]

@Mark Delosreyes There are a few questions you should be asking to see if it's worthwhile.

1) Are you a real estate professional? That would allow the extra depreciation deductions from cost seg, be used to offset your active income.

2) If not, are you hitting the material participation test of a STR that would allow you to also use those losses against active income.

3) Do you have enough income to offset, to warrant getting the study done.

Most firms will provide a free upfront estimate or analysis so you can see what the potential tax savings are, so you can make a more informed decision.

Finally, another thing to consider regarding beach front properties, is that the land value is often high, which will reduce the overall tax basis (the total amount you can depreciate)