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Purchasing or investing in real estate can be quite expensive. However, cost segregation helps real estate investors (both single & multi-family real estate investors) boost their cash flow. This is especially when purchasing or upgrading their real estate properties.
Cost segregation is a way for real estate investors to more quickly deduct the depreciation of a property against their taxable income. In other words, it’s a tax strategy to speed up depreciation and lower tax owed.
Important to note is that cost segregation isn’t available for your primary residence. This approach extends beyond commercial properties. You can also apply it to residential properties you own as investments, including single or multi-family properties However, it doesn’t apply to properties you inhabit as your primary residence.
Real estate accountants and engineers conduct a cost segregation study. They assess the property and segregate its components, such as plumbing, electrical, and carpeting, along with other interior and exterior elements that qualify for 5 to 15-year depreciation. Each component follows its distinct depreciation schedule instead of the property’s overall schedule.
Now, you can do the study by yourself, but it is highly recommended to use professionals such as real estate accountants and engineers. Why? Because you want to squeeze the greatest amount of tax savings from this tax saving strategy
You can perform a cost segregation study whenever you purchase, construct, or renovate a property. However, the best time to do it is within the same year of construction, purchase or remodeling as it gives you the most savings.
As a real estate investor, you cannot afford to not have a tax saving strategy. Cost segregation is one of the strategies that can save you on the taxes you pay year. At Gold Accounting Tax, we help single & multi-family real estate investors maximize their profits while minimizing their tax liability through tax strategies so that they can scale and grow their portfolio with peace of mind. Give us a call.
At Gold Accounting Tax, we know you want to be successful in real estate.
In order to do that, you need an in-depth understanding of your financials at any given time.
We understand because we are real estate investors ourselves and understand the specific challenges real estate businesses experience.