*Intro and outro music are from an original piece by

Carl Zukroff of The Blue Hotel

Jeff Hiatt

Performance Business Solutions LLC

Tax Cuts & Jobs Act

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You have stumbled on to another episode of Get your FILL, Financial Independence and Long Life, where we explore ways to achieve those two goals. Today we’re focusing on the financial independent side of FILL.

You’ve probably heard the adage, “It’s not what you make, it’s what you keep. Well, today’s motto is: It’s not what you make, it’s what you don’t have to pay in taxes.

Today is part one of a conversation with Jeff Hiatt. Jeff is an Expense Reduction Consultant. He and his team at Performance Business Solutions LLC, help business owners and property owners to reduce expenses and increase profits. A link to his website and to anything else interesting that we talk about today, you’ll find on my website, GetYourFILLPodcast.com,

Jeff, thanks so much for joining us today. Will you bring me up to speed on your business and how it works?

Jeff: I started back in ’94 doing expense reduction consulting for business owners trying to help them reduce expenses across a wide array of areas that they spend money on. Over time, that evolved and added, I added different tools to that toolbox of expense reduction. In ‘99, came across what is called cost segregation and as time progressed with my business and the economy, I began to really focus on cost segregation. About ‘02 or so, cost segregation really took off in terms of acceptance within the real estate marketplace. So since ‘99, we’ve probably done 18 000 cost segregation studies across the country.

We do them for almost every type of property out there whether it’s retail or office buildings or manufacturing facilities or restaurants, anything out there that has a depreciable life is eligible to take advantage of this thing called cost segregation and that’s what we’ve been doing and it’s really been a great tool to help real estate folks accelerate their ability to buy property and/or improve property.

So that’s what we’ve been doing.

Chris: How, for somebody who’s not familiar with – maybe somebody who’s just getting into real estate investing or somebody who hasn’t ever taken advantage of the segregated sort of accounting, could you give like a scenario of how it could work? So I’m a new investor and I just bought something…

Jeff: Sure, so the way that it works is if you buy a building or build a building or just do improvements – in other words, you’re just a tenant – so if you buy, build or improve a building, the IRS will automatically assume you’re gonna do 39-year straight-line depreciation. So, everything under the sun – every kind of building out there has 39-year depreciation – except for apartment buildings which are 27 and a half, so if it’s an apartment building 27 and a half, everything else is 39. So whatever you spend on the building, let’s say it was a million dollars, you’re gonna get a write-off of that every year for the next 39 years, equally. Equal payments.

So the bottom line is, I think that would be about, it would end up allowing you to write it off over that amount of time. What we do is allow the client to take write-offs, instead of the straight line $25 grand a year for the next 39 years, you would end up being able to find the pieces of the building that the IRS will allow you to write off over five years, seven years and 15 years.

So instead of that really long depreciation, you would end up being able to take pieces of it more quickly and thereby allowing yourself a better tax benefit early versus 39 years from now. The reallocation that we usually find on these buildings