The Honest Truth about Cost Segregations! Do they Work?

#1. He left out that if you or your spouse does not qualify as a Real Estate professional that you can use a property you have as a short term rental IF you rent it out for less the 7 days at a time. So problem solved for his first negative. #2. There is a time limit when the tax savings we’ll eventually play out. Will be many years BUT all you need is ONE good property to keep long term to rep the benefits of NEVER having to pay taxes again including on your W2/1099 money( if have 1 short-term rental) And you can do it over and over and over again. So depending on how much you make, you can buy one or two properties (by using your tax savings you can use it as a down payment for your next investment property) and you’re set for a very long time with paying no taxes untile it runs out. Would be best to keep in mind, going in to it, to keep the properties long term to avoid ever paying taxes again and then once it runs out just repeat it again. #3 You can absolutely use the money you save in taxes as a loan. This is for the Entrepreneurs that know how to turn that money into more and more money. This whole idea of saving taxes is for investors to begin with. Need to think like one. Thats why many “regular” W2 employees and doctors or what not, end up being Real Estate investors as well. Don’t let this guy discourage you. Be informed but also know, this shit works!

I thought the strategy was that after 5/7/20 years I could then go replace those items for yet another full write off that I wouldn’t get if I had just deprecated over the 27.5 years. I intend to keep the SFH and pass down to my kids.

Amazing content, love it.

Thanks for your insight Mark and thanks for signing your book for me and my wife yoshira when you visited Chicago.

Great content.

Great video of the pros and cons!

Great Video! I have a client doing a deal and we're at the planning stages of doing a cost segregation. I needed a video to back me up on my concerns. May be calling you.

Some very good points. As someone that offers this service these are all things that should be discussed as part of the strategy. Remember that a study also helps with setting up a framework for you depreciation for future cap and expenses. But again it comes down to your strategy right? buy? Sell? Planning on holding onto the property for 10years and replacing the roof and windows? Anyways subscribed, good stuff.

Thank You

There is a 4th issue. At the point of sale, the sales price is allocated between real and personal property. If your gain on the personal property portion is greater than the recapture, that gain is reported not deferred.

Great video. From what I have seen, it's rare people do a 1031 exchange. It's much more common people recapture the personal property at ordinary rates when it's sold. Rather than at 25% maximum rates under section 1250.

Excellent !

How far back can the IRS audit you? If you hold the property long enough don’t the waters get a little murky (just asking.. I don’t own any property.. yet)?? How can it be proven how much depreciation one took like 10-15 years ago?

Mark, there are articles on Accounting Today website that say you are incorrect about point #2. That personal property is defined differently for cost segregation vs 1031 exchange. Can you please clarify this and change video.

Thanks

Also under your example why wouldn’t the owner just do a cash back refi and suck the appreciation out tax free…never sell

If you invest in an opportunity zone and cost segregate, and hold for 10 years, will you have to pay back the depreciation?

Wait, if I bonus depreciate and asset that was on a 5, 10 or 15 schedule, shouldn’t I not have to pay back depreciation if I hold the house for more then 5, 10 or 15 years? And even if I sell before, it shouldn’t be a full repayment? Some of that depreciation was valid.

What if you buy ,cost seg, and Hold...And instead of 1031 you Get a HELOC

What if you don’t sell the property?