Understanding Real Estate Cost Segregation
If you want to save while making more money in real estate, you have to be knowledgeable in cost segregation. Learn it here. In today’s article, we are talking about real estate cost segregation: what it is and how it will benefit you. Defining Cost Segregation Cost segregation is a generally utilized…
If you want to save while making more money in real estate, you have to be knowledgeable in cost segregation. Learn it here. In today’s article, we are talking about real estate cost segregation: what it is and how it will benefit you.
Defining Cost Segregation
Cost segregation is a generally utilized tax planning tool. It permits organizations and individuals who have developed, bought, extended, or rebuilt any sort of real estate to increase income by speeding up depreciation deductions. Through cost segregation, they can also defer paying government and state taxes.
Every investment property has a flat line, a depreciation of 27 ½ years for an investment residential property, at least. 100% of the building value over the course of those 27 ½ years gets fully depreciated, usually about 3.63%. 27 ½ x 3.63 = 100%
However, cost segregation allows outside firms to use the IRS tax codes to expedite the depreciation process. So instead of having a flat line, you are going to have a huge bump and appreciation for the first 5 or 10 years and then it tapers off.
How Cost Segregation Helps You Save More Money
At the end of that same 27 ½ years, you depreciate the same 100%. But at the beginning, perhaps when your property isn’t making as much money, you would have paid the mortgages and everything else. You will need that depreciation to offset and help you save more money.
Perhaps at this time of year, think about it 27 ½ years from now. You might be retired, making less money, or in a lower tax bracket: you need the tax savings now.
Firms out there charge anywhere between $1,000-$1,500 per property. But it saves potentially $10,000 to $20,000 depending on how much your property is worth. At the end of the day, cost segregation is fantastic to expedite some of that depreciation to the earlier years of when you own a property rather than just allowing you to flat line it.
Our commitment
If you or anyone else you know is looking to find a property manager to help guide you through the process of both owning and managing an investment property as well as saving and making more money, please think of Green Ocean Property Management: where you get more than a property manager, you get peace of mind.
5 Reasons Why Early Renewal and Property Marketing Are A Must
One of the most important aspects of owning investment properties is the lease renewal process and property marketing. To do this, you have to start early. The renewal and marketing process has many steps, all of which should be carefully considered and done correctly. When facilitating the lease renewal and marketing process, we…
Can a Landlord Make Tenant Pay for Damages?
As a proactive property manager and company we’re always thinking of ways to save our landlords money and most importantly, hold our tenants responsible for the actions that they take. In the video, Jarrett Lau, CEO and Founder of GOPM is sitting in a bathroom and discussing the three things behind him that they…
3 Landlord Expenses You Might Not Have Considered
Our job as a property manager is to make as much money as possible with your property. and that means maximizing your income and minimizing your expenses, but our founder, Jarrett Lau, runs a company as well and has to make sure that his people are taken care of and we do things such…
Experience exceptional management and elevate your property with us
