All Forum Posts by: Julio Gonzalez

@Jeremy Santy If you're open to renting for a period of time, components of the property (like appliances, flooring, fixtures) may be depreciated faster using bonus depreciation. But this will require solid tax planning. Feel free to reach out if you have any questions!

Hi Havan, welcome to the community! There is a great group of members on here to connect with! 

-Julio

Great to have you here, Kevin! Welcome! You’re asking all the right questions. Love the clarity in your plan and market focus!

-Julio

Great to have you here, Jordan! House hacking is the perfect launch. This community will be a huge support for you!

-Julio

Great to have you here, Cody! Love your entrepreneurial spirit. I'm looking forward to seeing your investments grow! 

-Julio

Welcome aboard, Finnick! You’re doing all the right things by learning, connecting, and taking action!

-Julio

Welcome, Ana! Love your commitment to leveling up. I'm excited to see your investing journey take off!

-Julio

Welcome, Nado! Love your drive and mission. You're doing amazing work both in service and in real estate!

-Julio

A cost segregation study was performed in 2024 on a residential condominium in Hilton Head Island, South Carolina with a depreciable cost basis of $265,000. The single-story unit, originally constructed in 1981, spans 888 square feet.

Significant improvements were made to incorporate modern amenities, including contemporary appliances, a central HVAC split system and updated fixtures.

The aim of the study was to identify opportunities for accelerated depreciation and tax savings in order to provide both immediate and long-term financial advantages for the property owner.

Accelerated depreciation strategies can help real estate investors reduce their tax burdens immediately, boosting their bottom line in the process.

For this property, 35.35% of the total depreciable basis was classified as 5-year class life.

Assets identified in this category included:

• HVAC equipment
• Electrical systems and fixtures
• Floor coverings
• Window treatments
• Plumbing fixtures

The remaining 64.65% of the total depreciable basis was classified as a 39-year class life.

Assets identified in this category included:

• Interior walls and ceilings
• Building structure
• Basic electrical and plumbing systems
• General building components
• Doors and windows

The study resulted in a first-year depreciation increase of $62,803.40.

An engineering-based approach was taken for this cost segregation study, which used the following methodology:

• A thorough site visit to photograph and identify property components
• A cost analysis using engineering principles to allocate costs to specific asset classifications
• Examination of architectural plans, accounting records and construction documents
• Calculation of depreciation using IRS-accepted methods like MACRS

Keep in mind that bonus depreciation started to phase out in 2023. It’s 40% in 2025, 20% in 2026 and will be phased out in 2027 unless legislation changes.

For additional questions, check out this article on Cost Segregation FAQs.

Are you considering a cost seg study for any of your properties?

Your property has the potential to benefit from a cost segregation study, but there are many variables to consider.

Would you have net income or net loss without the cost seg study? Are your real estate investments active or passive? Are your losses locked up against your passive income?

Have you obtained any detailed cost/benefit analysis quote? Most cost segregation study companies provide the quote for free. Is it a reputable company and will the documentation provided from the study hold up in an audit? If you need any help or have any questions, feel free to reach out!