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What is a Cost Segregation Study and When Should You Use One? [Tax Smart Daily 037]

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Today's topic is all about cost segregation studies. Enjoy!
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Опубликовано:

12 июл 2021

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Комментарии : 24

@davidtisch5237 Год назад

The best simplistic break down of cost segregation I have seen

@davidtisch5237 Год назад

I need help I can’t find a CPA in my area that understands this tax practice on rental properties

@v90660 2 года назад

Thanks for the insight. It would be very helpful to have some numbers on the screen while you're presenting calculations. Just a suggestion for people who are visual learners.

@jackalope30 6 месяцев назад

Thank you for your video. 1 question, for high W2 earners who are in the 37% tax bracket and NOT qualified REPs, would it make sense to do a cost seg on one single family rental unit given that depreciation recapture tax rate is 25%. In otherwords, wouldn't that effectively lower one's tax rate on passive rental income from 37% to 25%?

@YonahWeiss1 3 года назад

Great video!

@michigan_616 Год назад

Is the Cost Segregation Study something I can do on myself?

@obiebrown Год назад

If a pool was in 15 year depreciation, e.g. You can then write it off in 1 year and what happens if you then remove the pool in 3 years time?

@melissajersey6777 Год назад

I live in my condo but am moving out in June 2023. I am going to turn my condo into a short term rental as an active investor. Would I be able to take bonus depreciation if I did a segregation study if I have owned the property for the last 8 years?

@brandonl9759 Год назад

Another great video! Loving these clips and also the podcasts. I believe I heard in one of your other shows/clips that the bonus depreciation bill could never come due if I never sell or if I 1031 right?

@tax-modern Год назад

Yes you can use a 1031 exchange to defer the depreciation recapture and avoid paying back the depreciation when you sell the property. But that just defers it until you eventually sell that next property that you exchanged it with (unless you do another 1031 exchange to keep deferring it). (I'm a tax professional but not associated with the Tax Smart channel.)

@cliff1127 3 года назад

Do you need to complete the cost seg the first year the rental property is put in service? Or, put another way, can I take normal 27.5 years depreciation for the first couple years, then do a cost seg in year 3 and take the bonus depreciation?

@TheRealEstateCPA 3 года назад

Yes you can, you'd file a Form 3115 whenever you do the cost seg. Work with an experienced CPA on that.

@PatrioticPatches 3 года назад

Thank you so much for all these awesome knowledge! A quick question if you wanted to do a cost segregation study on a property you already took 2-3 years of regular 27.5 years depreciation, how you do that? Thank you again

@TheRealEstateCPA 3 года назад

Thank you for the kind words! You can do a late cost seg. You'd file a Form 3115 and a 481(a) adjustment. It's complex though, I would recommend working with a CPA who has done many of these before.

@dantemoniquepirouz3162 3 года назад

Where should I keep the cost segregation study? Can it be kept in my Quickbooks Online or is it something I capture and keep in track of in Excel?

@TheRealEstateCPA 3 года назад

You can certainly report it in your QBO file. That's the best method, but I recommend you work with an accountant on that if you're not sure how to do it.

@user-sv3px5oy1c Год назад

Did you say most short-term rentals get depreciated over 39 years? Does that make a cost seg study more beneficial to STR investor with many properties?

@brandonl9759 Год назад

Curious to know about this as well

@tax-modern Год назад

Yes. If the average stay is 30 days or less, than you should depreciate it over 39 years. That's longer than the 27.5 year schedule for long or mid-term rentals. So yeah, there is an even greater advantage to doing a cost seg study for a short term rental. If you also use bonus depreciation, that increases your rental loss that you can claim in one year, and then if you qualify to use the short-term loophole, you can also deduct those losses against your other income. (I'm a tax professional but not associated with this channel.)

@chotam91 6 месяцев назад

You can deduct passive income against ordinary income? What do you mean short term loophole can you elaborate?@@tax-modern

@tax-modern 6 месяцев назад

@@chotam91 If you search the Tax Smart channel (the channel this video is from) for "short-term loophole", they have a bunch of videos that explain it in detail.