STR loop hole benefit in year 3 and beyond

Hello. Need some clarification about Tax benefits for STR using the STR look hole. Here is my situation.

Year 1 (2025): Purchased the STR property. Financed with a bank. Did Cost Segregation. Will get a good size bonus depreciation for year 1 including some other set up costs. Did 100 hour material participation and more than anyone else. Will get to offset W2 income

Year 2 (2026): Did major changes in property like installed pool and turf outside. Redecoorated and furnished the STR. Will claim all these expenses for 2026. Will do 500 hour material participation. Will get to offset W2 income.

Year 3: For year 3 or 4 are there any other expense I can carry over from prior years to offset my W2 income tax ? ? I do not anticipate any major expenses. The only expense I can create is to pay down the mortgage from my own money and count it as "capital contribution".

Thanks

@Ryan Bakke, CPA

@Mason Kimball, CPA

@Kevin Medina, CPA, MBA

2 comments