I'm Renting Part of My Primary Residence; Can I use Cost Seg on the Rental Portion? Yes, you can absolutely use Cost Segregation Depreciation on the rental portion of your primary residence. This tax strategy allows the property owner to accelerate the depreciation for the specific area of the home used to generate rental income, offering an effective way to obtain tax savings sooner while continuing to live in the home.
The key to applying this strategy is accurately determining the percentage of your home that is being rented. For example, if 30% of your total home square footage is used as a rental space, then 30% of the property's value could be analyzed in a Cost Segregation study. This allows for the reclassification of assets on that portion, accelerating the depreciation schedule and maximizing the available tax benefits.
Cost Segregation for Partial Residence: Key Facts
- Eligibility: Cost segregation can be used on the rental portion of your primary residence.
- Crucial Step: The key is determining what percentage of your home is being rented.
- Example Calculation: If 30% of the home is used as a rental, then 30% of the property's value is eligible for analysis.
- Benefit: Allows you to accelerate depreciation on the rental portion to get tax savings sooner.
- Actionable Next Step: If you are renting part of your home, reach out for help to unlock those tax benefits.
