Can a Cost Segregation Study Help You Lower Your Taxes?

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  • Bernie Williams
    Realtor · Keller Williams Moorestown NJ · Member since 2021 · 6 posts · 2 votes
    4y

    Great article. I also watched a Multi Family YouTube Video about this and I was just blown a way. Thank you

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  • BiggerPockets TeamPro Member
    OP
    Member since 2026 · 14k+ posts · 6 votes
    4y

    I have asked my CPA about cost segregation for our investments and circumstance, which is BRRRSTR. He was saying by expenseing these items during the remodel and not cost segregating is a better route for me personally. Was wondering your thoughts bc I'm not educated enough on either side to have a rebuttal. Is it best to expense all these items or cost segregate? Thanks

    Originally posted by Jimmy Brinkley.

    BiggerPockets
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    • Bonnie Griffin KaakePro Member
      Real Estate Consultant · Denver, CO · Member since 2021 · 667 posts · 389 votes
      3y

      Jimmy, If you can expense the items that is always best. When you purchase a building and do remodeling, some items can be expensed if they are less than $2,500. Other major remodeling work cannot be expensed and must be capitalized and depreciated. The capitalized items in the first year of ownership become part of your purchase price. If you plan to hold the property for at least 2 years, then cost segregation is a great option in most cases. Unfortunately, if you are buying, rehabbing and selling, cost segregation is not for you. A property must have occupancy or posted as ready for rent in order to do a cost segregation study.

      The best approach if you are planning on holding the property for at least 2 years, is to get a no cost estimate that will give you what tax benefit you can expect and what it will cost to actually do the study.

      [email protected]303-475-4459
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