Save on Taxes with a Cost Segregation Study – Episode 806

There many great options for real estate investors to save on taxes, but unless you’re working with an amazing CPA, there are a lot of strategies you might not have heard of. You probably know about depreciation, but a cost segregation is a way for you to accelerate that depreciation and save on taxes.

On today’s show, I’m walking you through some of the basics of a cost segregation study. We’ll talk about how it works, what types of investors can benefit from a cost segregation, and more. Please join me for episode 806 of Investing in Real Estate!

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In a cost segregation study, the components that make up a property are thoroughly analyzed for the sole purpose of reclassifying these eligible items into different tax classifications.

I know that sounds technical, but let’s get into the why. Why would someone want to divvy up the components into different tax classifications? Instead of depreciating everything at a rate of 27.5 years, a cost segregation allows you to reclassify components into smaller windows — 5, 7, or 15 years. Doing this can potentially save you thousands of dollars on your tax bill, depending on your unique situation.

Let’s dive into four types of investors who can benefit from a cost segregation:

1) High-net worth individuals who need more tax write-offs
2) Those who would like to avoid paying high taxes
3) Investors who need to offset capital gains
4) Real estate investors who are buying at least one property per year

If that sounds like you, you might be wondering how to go about getting a cost segregation study. You’ll need to hire an expert. A cost segregation engineer is a CPA with specialized knowledge on this specific section of the tax code.

Is it a good time to do a cost segregation study? Yes! Just like when someone asks if it’s a good time to invest in real estate – the answer is always yes!

But specifically, there’s a lot of talk about the Biden administration raising the capital gains rate and/or doing away with the 1031 exchange. If you think you need tax savings, I’d recommend looking into a cost segregation.

If you want to learn more about cost segregation studies. I can recommend a couple of resources. First, I have a comprehensive blog posts that breaks down all of the details and numbers. Check it out here.

And if you’d rather chat with someone one-on-one, our portfolio managers are specifically trained on our cost segregation program. You can book a free call to get your questions answered and learn more about if you’d be a good candidate for a cost segregation study.We even offer new construction rental properties with a cost segregation built-in, creating a hassle-free, done-for-you experience.

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