How To Do A Cost Segregation Study When It Saves You Money and When It Doesn’t
About this episode
Toby Mathis and Chris Streit discuss the intricacies of cost segregation studies, including their benefits, limitations, and key considerations for investors.
In this episode, host Toby Mathis, Esq., welcomes returning guest Chris Streit to break down the truth about cost segregation studies — when they work, when they don't, and who should consider one. Chris explains how cost seg studies accelerate depreciation by separating a property's components into shorter-lived assets, enabling large year-one deductions under bonus depreciation rules. They walk through a real-world example of a $500,000 duplex to illustrate potential tax savings, and discuss who qualifies to use those losses — including real estate professionals versus passive investors. The conversation also covers the best and worst property types for cost seg, how to use studies to offset rental income across a portfolio, and whether you can apply a study retroactively after a tax year has ended. Chris shares critical red flags to watch for when hiring a cost seg firm, including improper land valuation, lack of site visits, and insufficient substantiation — all of which can expose investors to serious IRS risk. Tune in for expert, no-nonsense guidance on one of real estate's most powerful — and misunderstood — tax strategies. Highlights/Topics: 00:00 Intro - Bonus…
Topics covered
- Bonus depreciation
- Cost segregation study
- Tax savings
- Real estate professionals
- Passive investors
- Property types for cost seg
- Red flags in cost seg firms
Keywords
- depreciation
- tax strategy
- real estate
- IRS risk
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