The Benefits of Not Doing a Cost Segmentation Study and Spreading Depreciation Over 20+ Years

A lot of tax preparers will just do your normal 27 and a half year or 39-year depreciation on properties of the whole property. If you put a property in service last year, 2022 is the last year that you get that 100% bonus depreciation. There's not necessarily a benefit in my mind to be spreading it out over a longer period of time.

Play episode from 15:55

chevron_right

Transcript

chevron_right

Transcript

Episode notes

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!

Links from the Show

BiggerPockets Money Facebook Group

BiggerPockets Forums

Finance Review Guest Onboarding