If You’re Not Using Cost Segregation, You May Be Missing a Bigger Deduction Than You

[William Thompson]

A lot of investors are still depreciating everything the slow way and never asking a bigger question:

Is there a faster way to recover some of this cost?

That’s where cost segregation comes in.

Most investors know the building gets written off over time. But what many miss is that some parts of the property may fall into shorter lives like 5, 7, or 15 years instead of sitting in the long 27.5- or 39-year bucket. And when that happens, the deduction can get a whole lot more interesting.

That does not mean every property automatically needs a cost seg study.

It does mean a lot of investors may be leaving money on the table simply because nobody looked closely enough.

I tell people this all the time: tax strategy should support a good deal, not create one. But if the deal is already solid, cost seg can be a powerful tool.

Curious how many investors here have actually run the numbers on cost seg versus just assuming it was only for large properties?