Cost Segregation for 8 unit worth it?

[Jeffrey Trudeau]

This past winter my business partners and I purchased our first out of state property (8 units in Kansas City) for ~300K.

This first year we are making many upgrades and will not turn much of a profit. We are planning on holding the property for the long haul.

We have talked about cost segregation, but not sure it would be worth hiring an engineering firm/ CPA/ Tax attorney for a property that low in value.

Would like to hear what the BP community thinks. Thanks, Jeff

[Yonah Weiss]

Originally posted by @Arlan Potter:

What do you mean by cost segregation. We have a 24 unit and we don't segregate costs per unit. We do segregate costs per location, but not within a location. too much detail

 What he was referring to is an engineering based study that determines and reallocates assets with a shorter depreciation life in a property, in order to take deductions earlier on. It used to be called component depreciation, and was usually only worthwhile for properties valued at over $10M. Times have changed, especially with the TCJA tax reform and the introduction of bonus depreciation on new acquisitions. This is a great strategy to create more cash-flow, especially when investing in more than one property.