Realtor · Phoenix, AZ · Member since 2020 · 79 posts · 37 votes
From what I understand, bonus depreciation has started to be phased out so does that mean the conversation around cost segregation will end and cost seg businesses will become obsolete?
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
3y
Cost segregation was around before Bonus Depreciation and will continue afterward, although likely at smaller volume.
Cost segregation is necessary if you want to take accelerated depreciation, which oftentimes can double your depreciation expense in the first few years of ownership. We would do Cost Seg, even without Bonus Depreciation.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
3y
Cost segregation was around before Bonus Depreciation and will continue afterward, although likely at smaller volume.
Cost segregation is necessary if you want to take accelerated depreciation, which oftentimes can double your depreciation expense in the first few years of ownership. We would do Cost Seg, even without Bonus Depreciation.
From what I understand, bonus depreciation has started to be phased out so does that mean the conversation around cost segregation will end and cost seg businesses will become obsolete?
Cost seg is likely to be affected but not that significantly:
1. 5-yr accelerated depreciation still beats 27.5/39-yr straight line by a mile
2. 100% Section 179 is available in many cases
3. Cost seg goes back to the year the property was placed in service which could be a pre-phaseout year
4. Phaseout itself will take 5 years, and 80% of the benefit this year is still a massive perk
5. There're other benefits of cost segregation such as partial dispositions