Depreciation questions. How do you handle it?

Question

Brandon Sturgill · Answer

@Adam Beckstetdt I pay my CPA $700...

Cameron Skinner · Answer

I noticed in your profile you may be constructing units, IRS allows the "cost" approach, I touched on this on podcast show 168. Even if your not building if you private message me, we can connect I can get some details on specific situation and try and point you in the right direction.

Good luck!

Jake Hottenrott · Answer

I've been waiting all day to use this.  Thanks @Brandon Sturgill!

Natalie Kolodij · Answer

@Adam Beckstetdt No a CPA can not do a cost segregation study.

I think he was implying that's what he pays to find out what depreciation method would be best. This is a question for your CPA.

Even if you get a study done for $3k it  can have major tax implications down the road. If you ever plan to 1031 the property I would definitely sit down and have a come to Jesus talk with your CPA first.

Cameron Skinner · Answer

@Adam Beckstetdt Lots of variables with cost segregation if you private me I can help you figure out if it would be worth while.

Adam Beckstetdt · Answer

Thank you to all who have replied. For some reason i wasnt notified that anyone replied that I could see. So your CPA will do cost segregation analysis for $700 a property? If that is true then I am sure that would easily pay for itself in the first year.

@Cameronskinner I have not built any units to this point but may in the future.

Paul Caputo · Answer

Your consultant is right about doing cost segregation on each building, but the cost may be lower than you would think and the benefits might be higher. It'd definitely be more than the $700 to your CPA for an engineered study which could cost $3K-$10K+. But if the study cost $3K and you get a $10K tax credit was it worth it? If the property was a little bigger and the study cost $5K and you get a $25K tax credit is that worth it? Of course it depends on your individual situation, but for most investors holding rental property or commercial property over 5 years the tax benefits of cost segregation studies are significant.

I'm a cost segregation specialist so if you want to see some real numbers or have any questions about cost seg let me know.

Depreciation questions. How do you handle it?

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