Owning investment property comes with real tax advantages, but only if you use them. In this episode, Tom Brodie, National Account Executive with CSSI – Cost Segregation Services, shares practical tips for getting more out of your deductions.
Depreciation Is Your Biggest Deduction
For most investment properties, depreciation is the largest deduction available. By default, residential rentals are depreciated over 27.5 years and commercial buildings over 39 years. That’s a long time to wait for the full benefit.
Speed It Up With Cost Segregation
A cost segregation study separates out building components like flooring, cabinetry, certain electrical, fencing, paving and landscaping, and reclassifies them into 5, 7 and 15-year schedules. Faster depreciation means bigger deductions now.
Tips to Keep in Mind
- Make sure the purchase price isn’t over-allocated to land, which can’t be depreciated.
- Consider a study when you buy, build or renovate, not years later.
- If you already own the property, missed depreciation can often be caught up without amending past returns.
- The cost of the study itself is tax-deductible.
- Work with your CPA so the study fits your overall tax plan.
Example result: a residential rental purchased in December 2019 for $260,910 (less land) produced a first-year tax savings benefit of $21,318. Results vary by property.
See What Your Building Could Save
Tom will run a free, no-obligation estimate on your property, so you’ll know what’s possible before you commit to anything.
Prefer to talk now? Call Tom at 713-906-3710.
I’m a two time Texas A&M graduate (BBA: 1981 & MBA: 2001) who worked for Shell Oil Company for 26 years. I learned the importance of communications – both verbal and written, as well as problem solving skills. With experience ranging from finding intra-company billing errors to defining customer requirements in global budgeting software to teaching people how to scuba dive and take pictures underwater. Tom Brodie Bio
