All Forum Posts by: Stanley Odum

It is important to note that Section 1245 tangible personal property is recaptured at ordinary income tax rates and Section 1250 real property is recaptured at a maximum 25% rate.

One depreciation recapture minimization strategy is to ensure properties are held for at least three to five years after performing cost segregation studies and reinvesting the accelerated deprecation benefit (tax deferral) at a given rate of return. An 8% discount rate is standard for commercial properties.

After the 2017 Tax Cuts and Jobs Act (TCJA) went into effect, many property owners realized that 100% bonus depreciation in the first year was too much to absorb and carrying forward any remaining balance was pointless due to unforeseen circumstances such as shorter than anticipated property hold times, limited lease income, lower tax rates, etc. Opting out of bonus depreciation by asset class (e.g., 5-, 7-, 15-year) in writing per Section 168(k)(7) is another depreciation recapture minimization technique. Keep in mind, once the election is made to opt out, the taxpayer cannot opt back in to the same asset class unless the asset types within the same asset class have been replaced. This is where taking advantage of Section 179 expensing by specific asset type can be beneficial for commercial property owners.

Depending on asset placed in service dates, a diminished or salvage value can be assigned to specific asset types which will also minimize the effects of depreciation recapture upon sale.

Disclaimer: This does not constitute tax advice. Refer to a licensed tax professional for guidance.

I am new to BiggerPockets and look forward to contributing to forums, answering questions from members, and sharing my 16+ years of practical experience and education assisting CPAs (tax professionals) and real estate investors with popular tax deferral, deduction, and credit strategies (Engineering-based Cost Segregation Studies, Tangible Property Regulations, Energy Efficient Commercial Buildings Deduction, and New Energy Efficient Home Credit).

Hello Everyone,

My goal in joining this platform is to help real estate investors lower their taxable income and increase their cash flow and my hope is that all will benefit from the wealth of knowledge I have accumulated over the last 16+ years in the field of specialty tax services.

The firm I represent, CSSI® - Cost Segregation Services, LLC, is the largest provider of Engineering-based Cost Segregation Studies in the United States. Since 2003, CSSI has conducted over 50,000 studies for over 20,000 clients nationwide, deferring over $55 billion in taxes.

In addition, CSSI works hand-in-hand with tax professionals nationwide to provide Tangible Property ("Repair") Regulations Compliance & Analysis Studies, Energy Efficient Commercial Buildings Tax Deduction (Section 179D) Certifications, R&D Tax Credit, and Green Zip Tape.

Our free monthly NASBA sponsored CPE (Continuing Professional Education) webinars are open to CPAs, EAs, real estate investors, brokers, developers, financial advisors, wealth managers, etc. Note that CPE credit is only available to CPAs. If interested in attending an upcoming webinar, please send me an email.

To learn more about me, CSSI, and how we can help, please visit our website, join my YouTube channel, connect through LinkedIn, and/or contact me directly by phone or email anytime.

I look forward to sharing, learning, and growing together.

We are all in suspense on this one. Bonus depreciation is currently 40% for properties purchased or newly constructed and placed into service in 2025. We still have clients applying 100%, 80%, and/or 60% bonus depreciation retroactively through performing cost segregation studies on previously purchased or constructed properties.