Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 461 posts · 250 votes
2d
Hi Eric-
You asked about the Rent to Retire program for buying short-term rentals and doing cost segregations.
While I am not familiar with the Rent to Retire program, I know Semi-Retired MD does a comprehensive program on this and you don't have to be a physician to go through their program and be a part of their community. I believe they are starting a new class right about this time of year so you might want to look into it.
Thanks Jeff. I learned a bit about the concept of cost segregation and bonus depreciation. Great for year 1, not so much tax help in tax year 2 and beyond. Thanks.
Specialist · Tampa FL · Member since 2026 · 7 posts · 6 votes
2h
you've got the core idea right: cost seg is mostly about timing. It pulls depreciation forward rather than creating new deductions. A few things are worth knowing before you write off years 2+ though:
You still depreciate the remaining building portion every year after year one. It's just a smaller number.
If the year-one loss is bigger than what you can use that year, the unused amount generally carries forward rather than disappearing.
For the STR strategy specifically, the losses are only non-passive in years when the average guest stay is 7 days or less and you materially participate. If either changes, the treatment changes too.
When you sell, depreciation you took can be recaptured, so it's worth planning the exit alongside the purchase.
I work in cost segregation. My best advice is to ask your CPA for a simple multi-year projection (with and without a study) before you buy. It makes the year 1 vs. later years trade-off much clearer.