What is cost segregation, and how can it help real estate investors maximize tax savings?

 

This episode digs into the powerful tax strategy of cost segregation. Eric Oliver from Cost Segregation Authority joins host Taylor Loht to explain what cost segregation is, how it works, and why every real estate investor should understand and utilize this tool.

 

They discuss the tax advantages of cost segregation for real estate investors. Eric provides an overview of cost segregation, explaining that it allows investors to accelerate depreciation deductions by segregating building costs into shorter asset lives. They discuss bonus depreciation, how it puts cost segregation “on steroids,” and how the percentage is reducing but still favorable for investors. Eric clarifies that cost segregation deductions are passive losses that typically can only offset passive income. Eric emphasizes the importance of working with a qualified tax strategist rather than just a preparer.

 

[00:01-4:30] Opening Segment

Cost segregation accelerates depreciation by segregating assets into shorter tax lives

Allows writing off deductions faster versus straight-line depreciation

Identifies items like flooring and appliances that can depreciate faster

 

[4:31-9:00] The Power of Bonus Depreciation

Bonus depreciation allows taking a larger deduction upfront

Allows immediate 100% write-off on assets under 20 years life

Phases down over the next few years but still beneficial

 

[9:01-15:30] Passive vs. Active Losses

Cost segregation deductions are usually passive losses

Can only offset passive income without special status

Real estate professionals can deduct against active income

 

[15:31-23:00] Not All Studies Created Equal

Online calculators don’t follow IRS guidelines

Conservative estimates leave tax savings on table

Engineering-based studies with site visit better

 

[23:01-31:30] Tax Strategist vs. Preparer

Tax preparers just file based on the given information

Tax strategists proactively minimize your tax liability

Meeting at least quarterly ensures maximizing deductions

 

Quotes:

"Cost segregation really is just accelerated depreciation on your real estate assets." - Eric Oliver

"Bonus depreciation puts cost segregation on steroids and creates a bigger deduction in the first year." - Eric Oliver

 

Connect with Eric:

Website: www.costsegauthority.com

 

Apply to Invest with Taylor at www.investwithtaylor.com

 

Track your wealth for free with Personal Capital, go to www.escapingwallstreet.com

 

Please leave a review and help others escape Wall Street and build wealth on Main Street!