All Forum Posts by: William C.

 Thanks for taking the time to comment. I agree with your approach. It is what guides us. Tax play is secondary, but still want to be informed on it pre-purchase.

 Thank you. Good read.

 Thank you for the reply. This inspires me to nag the cost seg study providers for more estimates. I tend to avoid that since my closing rate compared to number of deals analyzed is so low.

My thought with building a personal calculator is to address some of the overstated estimates I have received in the past. I attribute that to me not providing enough detail and also the desire to win your business. My thought is a personal calculator would tend to be more accurate.

Has anyone built a custom spread calculator with the intent of quickly analyzing deals for STR loophole & cost seg purposes? If yes, can you share? If no, can you help my brainstorm what one could look like?

My thoughts are:

Step 1: Input purchase price. Separate out land value v. structure value. Carrying just the structure value forward.

Step 2: Use an online estimator tool like KBKG to enter the details of the property. This will spit out out a bonus depreciation number. Carry that forward.

Step 3: Optional. If this an ADU property, calculate the square footage of the STR and compare that to the overall square footage of the purchase. Carry a portion forward.

Step 4: Custom part. Estimate taxable income for the year. Using STR loophole (if not REPS) how much would taxable income be reduced by? Estimating combined marginal tax rate (fed & state), get an estimate of overall tax dollars saved.

Output from this could help a person pass on properties that don't hit a personal threshold of benefit, or move forward with the ones that do. I realize this is an oversimplification. What feedback and edits do you have?

Just an update as this potential deal is quickly falling apart. Sharing details here so others may learn.

Sellers of the prop. had been operating multiple STR's in unpermitted structures. Part of their sell is this is a multi-STR business. At some point a property line was moved to create an additional buildable lot. During that process the county noticed one of the unpermitted structures. They went through the permitting process with the county for one of the structures. Given the zoning and county rules, they had to sign a perpetual affidavit saying the structure could never be used as a STR. My understanding is the same would be imposed on a new owner.

So STR loophole approach would be eliminated for someone like me who is not REPS. Also, have uncovered county-level issues with the new lot that was created. County is saying it is not a legal, buildable lot since the property line move was done incorrectly. These could all end up with favorable outcomes, but until they do the value of this opportunity is greatly diminished.

This is good counter-point. Thanks for taking the time to respond. The insurance and risk piece is daunting. There is precedence in our area for being able to obtain insurance for an unpermitted STR. Each situation is unique and we would fully vet ours. For now, focused on if a cost seg, bonus depreciation, STR loophole approach would be viewed favorably or not. Thanks again.

Unique situation. I can provide more info as needed. Proposed strategy is to purchase a property that has both permitted and non-permitted, but livable, structures. Use one of the non-permitted structures as a STR (it's currently successfully being used this way by the owners). Do a cost seg on that non-permitted structure and use the STR loophole to utilize those losses for tax off-setting purposes. Any opinions on tax legality of this?