Question on Cost Seg in CA

[Brian Gerace]

I am looking to purchase real estate for both investment purpose as well as to offset as much tax liability as possible.  Is my thinking correct that homes in highly appreciated areas won't benefit as much from Cost Seg.  I was looking at an attractive rental but it looks like the land value is 75+% of the value, so I would be paying a ton get very little tax benefit.  I know the decision shouldn't be made of tax benefit alone but starting to think other areas may help me accomplish both more efficiently.

[Michael Plaks]

Future land appreciation in this area might outweigh any tax benefits from buying in other areas, with a better (tax-wise) ratio.

Before pursuing your plan, talk to a real estate accountant to figure out if you can, in fact, benefit from cost segregation. Not everybody can: https://www.biggerpockets.com/forums/51/topics/1075919-five-...

Also, cost segregation will not help you with your CA state taxes, only (potentially) with your Federal (IRS) taxes.