The Ultimate Tax Reduction Strategy in Real Estate: Cost Segregation Studies

💰Cost segregation studies allow you to take more depreciation expense on your real estate properties, resulting in reduced taxable income and lower taxes.

🏠Depreciation is a non-cash expense that helps you recover the cost of your property over time. Cost segregation studies identify shorter depreciation periods for different components of the property, maximizing your tax deductions.

🔑Bonus depreciation is an additional tax benefit associated with cost segregation studies. It allows you to deduct a larger portion of short-lived property in the first year.

📉Bonus depreciation rates fluctuate over time, so it's important to stay updated. Currently, bonus depreciation is 80%, but it will decrease gradually in the coming years.

📚Consulting with a tax professional is crucial when implementing cost segregation studies and maximizing tax savings. They can help you navigate complex tax laws and optimize your tax strategy.

What is a cost segregation study?

—A cost segregation study is a detailed analysis of a property's components and their respective costs. It identifies shorter depreciation periods for certain components, allowing you to take more tax deductions.

How does cost segregation save me money in taxes?

—By identifying shorter depreciation periods for certain components of your property, cost segregation studies increase your depreciation expense. This results in reduced taxable income and lower taxes.

What is bonus depreciation?

—Bonus depreciation is an additional tax benefit associated with cost segregation studies. It allows you to deduct a larger portion of short-lived property in the first year, maximizing your tax savings.

How often do bonus depreciation rates change?

—Bonus depreciation rates have fluctuated over the years, ranging from 30% to 100%. Currently, the bonus depreciation rate is 80%, but it will decrease gradually in the future.

Why is consulting with a tax professional important when using cost segregation studies?

—Tax laws can be complex, and optimizing your tax strategy requires expertise. A tax professional can help you navigate the intricacies of cost segregation studies, ensuring you maximize your tax savings.

00:00In this video, Sherman, a tax specialist, explains the concept of cost segregation studies.

02:50A cost segregation study allows you to take more depreciation expense on your real estate properties, resulting in reduced taxable income and lower taxes.

04:41Depreciation is a non-cash expense that helps you recover the cost of your property over time.

08:04Cost segregation studies identify shorter depreciation periods for different components of the property, maximizing your tax deductions.

10:49Bonus depreciation is an additional tax benefit associated with cost segregation studies. It allows you to deduct a larger portion of short-lived property in the first year.