Can Cost Segregation Work for Just the Rental Portion? Yes, you can absolutely use Cost Segregation on just the rental portion of your primary residence, allowing you to unlock tax savings sooner on the percentage of the property used to generate income. The key is accurately determining what percentage of your home is being rented out.
For example, if 30% of your home is used as a rental, then Cost Segregation can be applied to 30% of the property's value. This allows you to accelerate the depreciation on that specific portion of the property, providing tax savings and boosting cash flow while you still live in the rest of your home. This is a powerful strategy for homeowners who have house-hacked or converted a portion of their residence into an income-producing unit.
Cost Segregation for Partial Rentals: Key Facts
- Eligibility: You can absolutely use Cost Segregation on the rental portion of a primary residence.
- Key Determination: The study is based on the percentage of your home being rented out.
- Example Allocation: If 30% is used for rental, then 30% of the property's value is analyzed in the study.
- Benefit: Allows you to accelerate depreciation and get tax savings sooner on the income-producing portion.
