All Forum Posts by: Bill S.

Conservative works, though it can leave money on the table. Quality firms will provide asset detail, audit protection and defend their study. On-line modeling does not give the asset detail, thus the err to conservative should an audit occur.

Using a engineering firm directly is the best option. There is a difference in 'engineering-based' and "fully engineered and accounted" methodology in the asset detail and the benefits. Some CPA's outsource to engineering firms, or use sub-contractors to do components. Best to work directly with the engineering firm.

Yonah is correct too in the 100% bonus offering extra benefit. As per the online solutions, they can work in certain conditions, but they we err to the conservative. It really depends on the property and your objectives.

Sorry guys, I diiffer here on this...

There are good options for cost seg on SRF, and we do them frequently, and complete these as an engineered study with asset detail to easily support future disposition/abandonment. We provide an assessment of tax and cash flow benefit, the client ca assess the value. Of course for some homes it does not make sense, we are very direct about that.

In addition, there are also automated modeling platform options on the market, our sister firm offers and option at  www.DIYcostseg.com, which utilizes our database history of over 14K fully engineered studies. These do not offer the asset detaio, but provide the depreciation numbers in minutes.

So yes, I would say there are good options, it just depends on the SFR in question, and the owners plans with the property and their tax situation.

Kris, 

@AshishAcharya seemed to have very sound accounting advise. Others went on about depreciation on rental properties, not a rental equipment business. At least that;'s what I gathered.

Regarding depreciation deductions on the business, you can potentially benefit from cost segregation based on the rental company buildings/property. There are a number of factors to consider; how long your brother has owned it, value of the property, type of building and specialty options (charging stations for electric equipment, etc.), fencing and security systems, and numerous other factors. 

You should have a contact professional Cost Seg firm to discuss and provide you with a Feasibility Analysis accordingly. 

Hope this helps, Bill

@Jason Powell

Jason, good advice hear for the most part. Paul gives a great explanation and validation for engineered studies. And the "don't do it yourself, although you could" advise is sound. That will be residual at best, and not stand up to an audit. 

Using an engineered firm, that breaks down all assets (straight-line and short life) offers significantly more benefits, ability for retirement/disposition, and protects you in the unlikely event of an audit.

Most forms offer a free Feasibility Analysis, so that you can determine the cost-benefit analysis. Our firm offers options and price points, all with audit defense, based on your particular circumstance and tax strategy needs. While $500K is a reasonable rule of thumb, an engineered study can be done as low as $300K property because of the details. There are also options for SFR (rental homes), which are usually +/-$100K.

Basit above is correct. Know your tax needs and strategy before engaging a study. And do your homework on who you hire. The "engineering-based" study proclaimed by many is just that -- 'based' on engineering -- not actually a "fully engineered and accounted" methodology. Good luck.