Cost Segregation -- How Much Can I Really Save?

[Timothy Lewis]

Greetings BP!

I am trying to figure out if paying for a Cost Segregation Study would be worth it for a duplex I purchased earlier this year. I haven't done this for any of my properties in the past but with the election coming up, I don't know if I will have the opportunity to depreciate RE in this manner in the future. I have done some research and it seems like the individuals that benefit the most from Cost Segregation Studies are those who purchase very large assets like commercial properties or apartment buildings. For anyone with knowledge or experience in this area, what are your thoughts?

So the property I purchased was duplex for 120k. I purchased the property with conventional financing. It's collecting $1400 per month in rent and I'm cash-flowing about $400 per month in total. Instead of depreciating the property over 27.5 years, would it be worth paying someone to do a CSS and depreciating the entire asset at once?

[Paul Shannon]

I think it’s very worth it if you can qualify for “real estate professional” status as defined by the IRS.  Allowing you to deduct your passive losses against your active income, including your spouse if you have one.  Otherwise, likely not worth it unless you have a lot of other rental income to offset.