IRS finalizes Cost Segregation Rules (and timeline)

[Tyler Baldwin]

The treasury dept and IRS just released the final set of regulations for the popular 100% bonus depreciation schedule.

And great news for the Real Estate pros trying to avoid taxes... the “placed in service” date was extended to January 1st 2027 (2028 for certain longer production property)

So... you can keep up this new winning strategy... and avoid paying taxes for the next several years.

The Tax Cuts and Jobs Act of 2017 increased the first year Bonus Depreciation deduction percentage from 50% to 100%.

That means... taking advantage of a Cost Seg Study... you can buy a building, front-load 20%-40% of the total depreciation to the first year. Then, you can use all that tax liability you just avoided, to go buy another building. Hit repeat. And, avoid a ton of taxes every year while building a massive real estate portfolio.

[Michael Plaks]

@Tyler Baldwin

Good news on the bonus extension for sure.

But I would be more careful hyping up cost segregation as universal tax avoidance. It's a great strategy in some situations, not all.

I wrote about it before if you want so see my position: https://www.biggerpockets.com/...