Maximize Your Depreciation Deductions: The Power of Cost Segregation Studies Explained

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Ever wondered how you could significantly reduce your taxable income from real estate investments in just one year?

In this episode, Mike Jesowshek introduces Gabriel Florentino from Engineered Tax Services to discuss cost segregation studies, a tax strategy for real estate investors aiming to accelerate depreciation deductions. Gabriel explains the concept and benefits of cost segregation, emphasizing its significant impact on reducing taxable income by identifying and reclassifying property components to shorter depreciable lives. The discussion also covers the importance of understanding accounting terms, the difference between cost segregation and traditional depreciation methods, and the added advantage of bonus depreciation introduced in 2017, which allows for even greater tax savings in the early years of property ownership.

[00:00 - 08:37] Cost Segregation Studies

• Mike introduces Gabriel Florentino to discuss how cost segregation can be a key tax planning strategy for real estate investments.
• Cost segregation allows for accelerated depreciation, offering significant tax benefits.
• Gabriel explains cost segregation as a method to write off 25-30% of a real estate asset's purchase price in the first year.

[08:38 - 14:36] The Impact of Bonus Depreciation

• Bonus depreciation, starting in 2017, boosts the benefits of cost segregation by allowing immediate depreciation of certain assets.
• Gabriel highlights the significant tax savings achievable, even as bonus depreciation percentages change over time.

[14:37 - 19:52] Practical Examples and Cost Study Analysis

• Gabriel provides examples demonstrating the financial benefits of cost segregation and addresses the costs associated with conducting a study.
• Insights into the factors affecting the cost of a cost segregation study, including property type and location.

[19:53 - 22:08] Conclusion and Final Thoughts

• Emphasis on the value of cost segregation for both active and passive real estate investors.
• Gabriel mentions the complimentary benefit analysis offered to evaluate the potential benefits of conducting a cost segregation study.

Direct Quotes:

"Even if it's sunsetting, there is still a huge benefit of doing a cost seg study on a property." - Gabriel Florentino

"Cost segregation study is still a strong tool because you're getting the real value of depreciation for a lot of components inside a property." - Gabriel Florentino

Connect with Gabriel!

Email: [email protected]

Website: https://engineeredtaxservices.com

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

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