All Forum Posts by: Bob Dole

@Sean Graham What happens if I have more depreciation than I can offset from the rental income?  I get a carryover to the next year?  Thanks

There are no plan to sell any real estate in the near term.  The plan is to buy and hold.  This is for the income stream.  The next generation can figure out if they want to sell when we're gone.  But they'll also get the stop up costs basis too.

All,
Apologies for the newb question, but I just heard about cost segregation and have been reading up about it online.

My understanding is this (and please correct me where I'm wrong):
Pros:
-accelerate depreciation, front load (vs. just a straight line over 39 years)
-save money on taxes because of the depreciation

Cons:
-if I sell the property, the recapture will be larger
-not recommended if you flip properties

So hypothetical situation:
-Majority of our income is W2 based, let's say it's $500k
-Net income from commercial rental is $100k
-Income from dividends and interests is $100k
-Both of us are full time W2, so non-prof real estate (but this can change  -- please see below)

So we're hypothetically grossing $700k a year.  If we do cost segregation how much would we reduce our taxes by?

-Purchased a commercial property this year for ~$2m.  The estimate I have from a cost segregation firm is $316k (w/ study) vs $28k (no study)
-Assume we're in the 37% bracket
  -Does this mean, I can claim a $117k depreciation deduction for this year?  Essentially lower my taxable income by $117k?!  So instead of a $700k income, we'd be looking at $583K instead?  

As I mentioned above, we're both W2 employee.  But one of us no longer is a w2 employee as of Oct 1.  Can this person now be "a real estate" professional?  What's the advantage here?  BTW, the rental property is cash flow positive.