The only reason why people aren’t doing cost segreation is because they don’t know about it.– Yonah Weiss
How to Save on Taxes with Biden’s Impending Tax Hikes for Investors & Agents
It’s a sad truth that people will spend more time trying to lower their cell phone bills than they will trying to lower their taxes.
The subject comes up and brains get foggy. The lack of information and education on things such as cost segregation and tax credits is costing investors thousands each year.
Yonah Weiss helps investors analyze and strategize to save hundreds of thousands in taxes. In some cases, he has helped his clients to pay no taxes whatsoever. Here’s the (perfectly legal) way he does it…
Read the Full Show Notes Below…
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Here on the CarrotCast, we have talked about generating leads and how to close more of them, but we haven’t talked about taxes and how to keep more of the money we are making – at least not in a while.
This episode of the CarrotCast is perfect for those who want to expand their portfolios from single-family homes, moving into multi-family or commercial properties. This is also great for any agent or investor who is looking for a path to pay absolutely nothing in taxes. Yes really.
If you are looking for a way to get out of the transactional business and think more of long-term assets, then this is the episode for you.
What is Cost Segregation?
Cost segregation is a tax-saving tool that is really a no-brainer once you know about it. It is an advanced form of depreciation that will break down a property, with the understanding that things depreciate at different rates. Instead of claiming depreciation on the entire property over 29.5 years for residential properties, (or 39 years for commercial properties,), you can break out the depreciation by type.
For example, appliances depreciate over a span of 5 years, while land improvements take 15. These things that appreciate more quickly can be claimed as bonus depreciation, and taken upfront in one payment.
Who Can Benefit From Cost Segregation?
Real estate professionals have their own unique tax status. There are certain qualifications to be considered a “real estate professional,” but once you are, there are special deductions you can take against your regular income.
Anyone who has constructed, purchased, expanded, or remodeled any kind of real estate, spending a certain percentage of their time on this each week, will typically qualify.
What Type of Properties Work Well With Cost Segregation?
You can use cost segregation with any type of real estate investment. Every property will have a slightly different percentage you can claim. For example, once you have everything broken out, a 20-unit multi-family property will look different than a single-family home.
When Do You Set Up Cost Segregation?
While some people will have their strategy in place before buying a property, you can go back at any time to change the way you calculate depreciation. All you need is a simple form that will change the way you do your accounting.
You will be able to catch up on depreciation, without having to amend your prior tax returns. Some people will wait to ensure they are generating a cash flow before taking these large depreciation deductions.
How Much Will It Cost?
Yonah and his team will do a free evaluation to see if cost segregation makes sense for your situation. You can expect to pay a few thousand for the service, but it is well worth it when you are saving hundreds of thousands of dollars over time.
Here at Carrot, we recently paid $20k for a firm to help us with innovation tax credits. This investment will save us over 6-figures over the next couple of years.
Here at Carrot, we encourage our members to create a business of freedom. By properly planning, you will be able to keep more of your money, likely having a greater impact than if you were to simply hand it over to Uncle Sam.
So would you rather spend a little of your time setting this up with the goal of paying no taxes? Or would you rather close several more deals each month to give money to the government?
To me, being able to buy back my time, by keeping more of my hard-earned money, is a true business of freedom.
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Mentioned in This Episode:
- The Weiss Advice Podcast