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Do you want to know how cost segregation can help real estate owners lower their income tax liability?
In this episode, we'll explore how cost segregation works and the benefits it can offer. We'll discuss the properties it applies to, such as single-family, retail, office, industrial, and self-storage. We'll cover different depreciation methods, such as five-year and 15-year property classifications. We'll also explain when to do a cost segregation study and how it works with CPAs. Plus, we'll give you the lowdown on bonus depreciation and the cost savings opportunities associated with cost segregation on previously owned properties.
Tune in to this episode to learn everything you need about cost segregation!
[00:00 - 05:58] Unlock the Benefits of Cost Segregation
- Cost Segregation is a tax strategy that allows real estate owners to lower their income tax liabilityIt involves breaking down the property into its components and assigning different valuable lives, values, and timeframes for depreciationCost segregation can be done in the first year of ownership or on a property owned for many years
[10:56 - 19:34] Maximizing Your Tax Benefits
- Most accounting firms do not do cost segregation in-houseCPAs are not tax strategists and do not advise on tax strategiesCost segregation studies can be done by a third-party firm or DIY softwareDepreciation deductions can only offset passive income unless you are a real estate professional
[19:35 - 26:15] Recapture Tax
- Recapture tax means when you sell a property, you're subject to capital gain tax on the amount of profit between the purchase price and sale priceThe recapture tax is broken down into three levels, with some portions taxed at 25
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Tweetable Quotes:
"Cost segregation is a tax strategy that allows real estate owners to lower their income tax liability by increasing deductions during the early years of ownership." - Yonah Weiss
"The depreciation is not intrinsic to the property. It's intrinsic to the property owner, which means every time the property changes hands, you get to start over that 27-and-a-half-year schedule."" - Yonah Weiss
"No one likes paying huge amounts of tax. The best strategy I've found and have seen hundreds of people literally use is self-managing your short ter
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