Biggest tax mitigation for your buck
I have a large tax consequence this year. Thoughts to purchase a commercial property with leases in place, perform a cost segregation and get some tax deductions for 2025. Cost seg analysis on 750K prop = 45K in tax savings +/- (overall tax burden is 250k). Assumed that 100% depreciation would also kick in but CPA is saying there are stringent restrictions in place to use that bonus in 2025. Rethinking dropping 25% of cash (currently invested making some bucks) financing remaining balance at 7.5% interest rate + closing costs/orig fees etc for just a 45k tax benefit. Deals are hard to find in this space, been looking for 3 months. Finding cap rate over 7.5 with leases in place (700k - 1.1) very difficult to find with our criteria. Knowing that our main goal is tax mitigation, looking for opinions on who thinks this is a lot of complication to get a little gain. I'm starting to realize maybe this strategy is not worth all the work and risk. Just keep my money working for me as is, pay the tax and move on. I would appreciate feedback and your thoughts from experienced investors who understand the tax code and consequences of such actions. God bless
Most Popular Reply
Buying a property solely for tax purposes is a lot of risk relative to the reward. Personally, if you are self employed or have a lot of stuff going on income wise, I would first look at getting a second opinion from a more aggressive CPA. Will cost infinitely less than a commercial property and may have the same desired outcome. Other than that, perhaps look into opportunity zones + commercial to maximize tax savings.