The Cost-Segregation of Property

The IRS created this random number. If I don't own that property, I can't take that depreciation. With accelerated depreciation, on average, we get to front load about 30% of your building value into that first year. When you sell, your gain is going to be higher by basically that amount because we reduced what it's worth. You might not even have to fuss with a 1031.

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Tax season is a nerve-racking time for many, especially for those who don’t have simple tax returns. If you’re a real estate investor, you need top-notch tax advice if you hope to reap the best tax savings when filing—legally, of course. And that’s exactly what we’ve got for you today!

Welcome back to another episode of the BiggerPockets Money podcast. Ahead of this year’s tax deadline, we’ve brought in reinforcements to answer all of your burning tax questions. Today’s guests are Kyle Mast, fee-only certified financial planner (CFP) and real estate investor, and Natalie Kolodij, real estate tax strategist and IRS enrolled agent. In this episode, they use their collective tax expertise and perspectives to tackle a handful of key topics.

Ever wondered whether there are different tax benefits when buying a property in cash rather than via a traditional home loan? If you’re in a partnership on a short-term rental property, how do you claim depreciation? What is a cost segregation study, and when should you do one instead of taking depreciation deductions over the normal timeline? As always, our trusted host Mindy chimes in with some important nuggets to help make your journey toward financial freedom that much easier (while owing less to Uncle Sam)!

In This Episode We Cover

Tax benefits of buying a property in cash versus getting a loan

The “2-out-of-5-year” rule that allows you to avoid HUGE capital gains taxes

How to claim depreciation deductions in an investing partnership

The pros and cons of cost segregation studies and normal depreciation deductions

Why you NEED to hire a real estate tax strategist (and how to find one!)

How to set up your business entity for the best real estate tax savings

And So Much More!

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