Tony and Jordan unpack how cost segregation can dramatically reduce taxes for short term rental owners.

A cost seg study breaks out components like driveways, pools, cabinets, appliances, landscaping, and sheds into shorter timelines. That allows you to front load depreciation into year one.

In one example, about $130,000 was accelerated. For a high income earner in a 25% bracket, that could mean $30,000 to $40,000 in tax savings immediately.

Key points:

• You must materially participate to use losses against active income. Track your hours.

• Portable structures not permanently affixed may qualify for 100% write off in year one. Some may not even require a formal cost seg study.

• Seller financing with little or no money at risk can cap or eliminate your deduction.

The takeaway. Cost seg is powerful, but only if your deal structure supports it.

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