I work for CSSI (Cost Segregation Services LLC), which has done over 60,000 engineering-based cost seg studies since 2003. About 30% of our studies are on STRs. What I've learned is that the KEY differentiator when it comes to the percentage of the property that qualifies for Bonus Depreciation in an STR is the amount of 15-year Land Improvements. Any assets in a Cost Seg study that are allocated to less than 20-year depreciable lives, qualify for 100% Bonus Depreciation under current tax law. In a Cost Seg study, the percentage of assets that get allocated to 5-year (internal) depreciation is fairly consistent across STR properties, whether they be homes or condos (QIP which I mention below is the caveat). That is not true for 15-year assets. Condos have very little Land Improvements such as driveways, fencing, patios, pools, landscaping, docks, etc. that qualify as 15-year depreciable items. The more of those things you have in an STR, the better for increasing depreciation deductions and Bonus Depreciation. One other lesson learned regarding Cost Seg studies on STRs and exterior assets -- a deck that is adjoined to the house is considered part of the structure and does not get allocated to 15-year asset category. If that deck is separated from the house, it would get 15-year asset allocation. One final note, this one regarding Qualified Improvement Property (QIP). If you buy a property that has been used as a commercial property, STR, or Long-Term Rental in the past, then come in and make internal, non-structural, upgrades such as flooring, painting, kitchen and bath upgrades, lighting, and many other things to the interior of the original footprint, the majority of those improvements are QIP upgrades and get 15-year asset allocation and 100% Bonus Depreciation. You can accomplish the same thing if you buy a property that has never been used as commercial or rental property in the past, but you must use it as an STR for a few months after purchasing it, then make your QIP upgrades.

Hey folks, I wanted to introduce myself to this community and offer our company's free initial Cost Seg assessments on STRs you own or are considering buying. I work for CSSI (Cost Segregation Services) based out of Baton Rouge and we perform engineering-based Cost Segregation studies. CSSI has done over 60,000 CS studies since 2003 (more than the next two competitors combined). Our free initial assessment will provide a conservative and high-end estimate of the faster depreciation deductions and income tax benefits a property would bring versus straight-line depreciation. No obligation required. After reviewing those with your CPA/tax professional, and if the tax benefits are worthwhile, then we can discuss the next steps for an actual study. CSSI hosts free monthly webinars (CPAs can get free CPEs by attending) regarding topics related to our different services. The next one is May 13 at noon (Central) and the topic is perfect for this community: Tax Strategies for Active and Passive RE Investors (STRs will be a big part of the discussion). Here is a link to register for that webinar (you may need to copy the link into your browser): https://zoom.us/webinar/register/WN_4laRE-XIRjWX4Iq8OIXecw If you register, please put me down as the CSSI Rep that invited you.