Cost segregation is a strategy that commercial real estate investors use that moves the depreciation to the early years of owning the property. Instead of depreciating the building over 39 years, doing a cost segregation study breaks down the property and frontloads the depreciation to the first few years of ownership. While this strategy is not for every business plan, we look to only hold a property for 3-5 years. Doing a cost segregation study allows our team to reap the benefits of depreciation sooner, rather than later. A cost segregation study helps us reduce our taxes and fits perfectly with our business plan.
A cost segregation study is done by engineers that look at the appraisal of the property, the property condition, a survey and additional documentation. This process can save real estate investors from having to pay taxes, or greatly reduce the tax burden. A cost segregation study can give investors “bonus depreciation” which is a huge benefit to investors.
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