#1 Tax Loophole For Real Estate Investors (The Magic Of Cost Segregation!)
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- เผยแพร่เมื่อ 5 มิ.ย. 2024
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In this video, Toby Mathis, Esq. will show you the #1 tax loophole for real estate investors and how you can take advantage of this tax deduction that most accountants miss.
There is a tax loophole that real estate investors are not taking advantage of. The number one tax loophole we are talking about is the magic known as cost segregation.
Most accountants miss applying cost segregation to your taxes which is costing you in the long run. What is a good way to counteract this occurrence? Watch this video to learn more about how you can apply it to your finances.
As we stated, cost segregation is a type of magic for real estate investors.
"It makes a massive impact." 20:29
Don't let the ignorance of others prevent you from saving and building up your legacy in a significant way.
Learn more about cost segregation and take on the real estate world with confidence.
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Until next time, good luck with your real estate investing, and stay smart.
Show Notes:
0:00 Intro
0:56 Cost Segregation Example
13:32 Break from the Home
21:23 Nuances of Cost Segregation
26:33 The 3 Tests
32:39 Cost Segregation Studies
37:06 Outro
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ABOUT TOBY MATHIS
Toby Mathis, Esq. is the best-selling author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Toby is a tax attorney and founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. Learn more at aba.link/tobyaba
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#realestateinvesting #costsegregation - แนวปฏิบัติและการใช้ชีวิต
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ok oo
I could def use your help with my rental. Awesome information.
Taxes help build schools, hospitals, and infrastructure that you use every day if everyone avoids paying taxes then what? Only the poor man pays taxes, and the rich use everything the poor man pays for, is that good? Badman says I don't care, greed is good.
@@MrManny075 stay poor and pay more taxes. Remember when doing your taxes at the end of the year you can always pay more. Just remember this, a poor man has never given anybody a job.
@@wsmaga No one said to pay more just be honest and pay what you should, A greedy person never thinks of paying more he always tries to pay less, Remember this, a greedy rich man without the poor man, he wouldn't have a job in the first place, in fact, he wouldn't have anything
Thanku. As usual, you killed it!!! Appreciate your time and effort sharing such potent content 👏🏿
Thank you so much, Tobi!
Very informative. Thank you
You will forever be in my prayers. Thank you so much for all you do and share
Toby,
Thank you so much. I recently purchased 4 rentals and was struggling to understand the tax benefits between being passive, active, & a RE professional. IRS pub 527 didn't help. But in one sentence you made it clear. "Passive losses are only deductable from passive income." BOOM. Now I know which way to go.
Thanks,
Dirk
This is one of the most useful videos I've seen in TH-cam
Glad you think so! Thank you so much for watching our content!
Reducing your tax liability is a smart financial move. It's all about strategic investments and leveraging tax-saving opportunities. I've seen significant benefits by diversifying my portfolio and taking advantage of tax-efficient investment vehicles. It's not about avoiding taxes, but rather optimizing them to maximize your wealth. I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made...
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@@Alexedmartin.I have had the intentions of starting investing. But I always thought it was late and I think I need to stop procrastinating. I will definitely 🔍 Regina Louise Collaro and see what she can advise .Thanks a lot .
This was of so much help to me.I have had the intentions of starting investing. But I always thought it was late and I think I need to stop procrastinating. I will definitely 🔍 Regina Louise Collaro and see what she can advise .Thanks a lot .
This was of so much help to me.
Thank you for the wonderful information and teaching; your shared knowledge is much appreciated
Thank you for watching!
Wow you videos are amazing!
Interested in your Cost Seg referral, I'm in the DFW (Denton) area. Thank you for the excellent video(s)!!
Thank you Toby!!
This was valuable information!!!!! Thank you soooo much! 😉
You are so welcome! Thank you for watching our content!
Awesome presentation, Toby!
Thanks for watching us!
Wow!, great stuff Toby, thanks for sharing
Thank you for watching the content, Efren!
Awesome content!
Thanks for the video
Great video. Thanks!
excellent, thank you for your knowledge.
Thank you for watching our content, let us know if you have any questions!
Great info! Shared with 2 people too!
Thank you!
Thank you for all this info. If you can please answer this question: As an American real estate investor, does this apply if you purchase a rental in a different country? Can you still write any of that off like in this example?
Thanks !!!
thank you for the full explanation
You are welcome!
Thanks a million Toby.
Thanks for sharing!
Our pleasure!
Great Video..👍🏼👍🏼👍🏼
Great video. Now to figure out how to implement into the portfolio!
Great to hear and good luck!
Great info!
Great video bud, keep it up. We definitely appreciate your efforts... for sure
Wow I'm watching this a second time... This is really damn good info!!! Thank you!
Thank you!
Always love your knowledge and video’s will definitely one of these days come see you
Thanks!!!
Toby, you are the best!
Wow! I wish I would of known about this 10 years ago. Thank you!
Incredible share of info. We appreciate your experience and advice.
Do you have accountant recommendations for rental property in MS and CO?
Again Tony Great Video, Information that Everyone of those new agents are going to hate>
87,000 of them...
Beautiful!
Thanks so much for your explanation. Can we do the bonus cost seg the second year of owning the house? If not, what can we deduct on the second year ? Thanks so much
Great question, in order to assist you further, I highly recommend you request a free 45-minute consultation to discuss our proven asset protection and tax strategies and how they apply to your unique situation. Visit: aba.link/84a6a3
Such a helpful video. Thank you! Now, how do we find these CPAs that can do this...?
Good question! Anderson Business Advisors has a team of Attorneys and CPAs that work with the provisions of the Internal Revenue Code to ensure individuals and investors can minimize their tax burden. With evolving laws and tax code interpretation, we strive to adapt and develop new strategies for people to have the most asset protection and tax mitigation that the law provides.
I've been doing these reports for almost 20 years. I still don't understand why more people don't use them. Every investor with an AirBnB or VRBO or even a regular rental property should be doing these.
Would you mind sharing how much the audit risk increases if you file the cost segregation report on a Schedule C? Also, what is the correct method for determining the value of improvements? For a newly purchased property, is it correct to use the purchasing price minus the land value shown in the newest property tax bill?
@@yingwu2143 if you have a professional do it properly, the audit risk is low. None of my reports have ever been audited, but then again I'm a licensed engineer and I'm exactly the type of professional that the IRS wants to see do these things. As a P.E. and a member of ASCSP and AACE, the methods for determining values are straightforward for me, but probably a mystery for the average person. Also regarding land, the IRS doesn't like to see assessed land values as the basis for land. They'd rather see comps or a full blown appraisal. There are also a small list of closing costs that can be incorporated into the final basis.
Amazing information, really clear and direct!!! Thank you
How do you get the amount of each such carpet. cabinets, &landscape value amount at house purchase? by estimating or by having a professional to do that?
I really need to talk to you Toby. I am a long time real estate investor and need your advice. I really enjoy your videos. Lots of great info which I appreciate!
Great ideas!
Great information. I have two questions.
1. Who comes up with the list of items that can be segregated? Do you have a minimum amount? Say 5,000 for an item to be segregated?
2. Who comes up with the appropriate cost and depreciation period (5,7,15 yrs). Is that the accountant? This is especially important if it is for property that was purchased years ago. Do you use the cost from when the property (eg the carpet) was purchased or from today?
Hey Toby, if you do an asset segregation, and end up with the IRS owing you, for several years, is there anything special that needs to be done?
Hi, who you you have that can do the cost segregation study?
Very informative , I am Canadian living in Canada
Do you recommend any one in GTA Toronto?
Thanks
Anil k
Thanks Thanks and Thanks 🙏♾️
Loved the video. I have a few ABNB's. Can you refer a tax firm that performs cost segregation work?
Hi Andy, we recommend speaking with one of our advisors. Here is the link to schedule a free strategy session, aba.link/tobyss. Or you may call to speak with an advisor at our toll-free line, 800-706-4741.
This is a fantastic video. So much great and accurate content. Most TH-cam tax videos promise something in the title and underdeliver with high level, vague content. This is quite the opposite. I’m a CPA, and you’re spot on, Cost Seg studies are rarely taken advantage of. Loved the Doctor AirBNB strategy you provided.
Thank you, we are glad to hear you found the info informative! We appreciate your kind words.
The problem with taxes is that they vary - State to State and country to country ... and there is a TON of nuance on all those rules and incentives.
Specific advise can be tricky to give - in broad terms, which I guess is why SOME channels are so vague.
This is why people specialize. A good CPA/Tax accountant can be worth their weight in gold.
Fair winds!
The depreciation has to be recaptured when you sell it?
Do you recommend whole life policies?
Hi, great video . I have a rent for 89 years already. But I didn’t do cost seg. Can you refer someone can do cost seg. Analysis in Orange County, CA?
Toby, do you have a referral in the Nashville area for cost seg? Thanks, Doug
I was a little overwhelmed but I think I followed most of this. Got any recommendations for a tax acct in Lake County. FL?
I recommend speaking with one of our advisors for any legal advice. Here is the link to schedule a free strategy session, aba.link/tobyss. Or you may call to speak with an advisor at our toll-free line, 800-706-4741.
My accountant is moving from California to Washington, he had mentioned being re professional to my wife years ago, but we understood she needed to be selling property herself and take courses exams and state licensing. She stopped working as nurse Rn to manage our properties. We never cost segregated and never filed as her being re pro. What a costly mistake. Please help and point me in direction of who we talk to. Thanks for great information.
Super!!!!
It's about time someone gives examples, clarify more for my self.Great job!
Thank you, let us know if you have any questions!
Thank you so much
Thank you for watching the channel!
Great information wish I knew This will work on personal property
Thank you. Great information!
Thanks for watching!
Learn how to use the IRS tax code to your advantage and keep more of what you earn during this free webinar. aba.link/xrx
Can you send a link for the company that can do the cost segregation analysis? Thanks
Thank you for the great information 😀
Our pleasure! Thank you for watching!
Don't these techniques just move deductions from the future to the present? In the long term is there any advantage?
You mentioned this could be done on real estate you already sold. Then right at the end I believe you said “if you have access to it” can you elaborate?
As always the best
This is a really good video!!
Thanks for the support!
Can you do that on commercial real state?
Toby, always on the mark
Thank you for your excellent video on cost segregation. Extremely interesting and enjoyable.
Coach Toby One!!!
How to assess the values, like carpets, cabinets, etc?
Great video! what about if the house has a mortgage ? can I deduct the same amount of this or just my equity? Also can I deduct the mortgage? Last question, so if I have a home, that I dont use or I lend it to a friend, can I ask him to leave the house November and write it off? or must to be the las time of the year?
Generally, this applies regardless of whether the property is financed or not. So, this applies to the full purchase price of the property, not just the equity. In addition to this depreciation, if the property is financed, you can often write off the interest being paid as well. If you are the legal owner of the home, you can use the depreciation as a loss, regardless of whether the friend stays or leaves in the property. Generally, as mentioned in this video, you may use up to $25,000 per year in the losses, or unlock all of the passive losses if you qualify as a Real Estate Professional. If you are seeking to take advantage of the short term rental real estate professional status, then yes, your friend would need to vacate the property, and you would need to self manage (if towards the end of the year).
How much will cost this study in NJ?
Several minutes in and I hear you are relieved by the prospective rental not having a pool. I'm really wanting a pool, but also planned on my current home to become a rental when I move. What's the downside of having a pool in a rental? Thanks!
What year does 100% bonus depreciation stop?
Where do we get tax segregation assessment? Is this something that can be done in Maryland?
Thank you for an amazing video ! If one does a cost segregation after selling the property, wouldn't they just be paying more taxes on their depreciation recapture when selling ? (unless they'd be doing a 1031)
A 1031 doesn't relieve you from the clawback provisions if you do a cost segregation study and don't keep the property more than 6 or 7 years.
Possibly, but generally if you are talking about rental property, most of our clients will either hold on to the property long term, or 1031 exchange the property for a new one.
Good info
Thank you nok, glad you think so!
Toby fantastic info. Thank you. Incredible explanation. I’m a physician and we are buying 2 houses for 9 million and then possibly a third if things work out well. We will rent these as they are 1031 properties. Can I depreciate these using your description here even though I am still practicing and using a rental management company?
Thanks J Lee MD
Hi Justin, we recommend speaking with one of our advisors for any legal advice. Here is the link to schedule a free strategy session, aba.link/tobyss. Or you may call to speak with an advisor at our toll-free line, 800-706-4741.
What if you make rental to primary
Mr.Mathis is Brillant !
Thank you so much for the kind words!
Hi Tony .You just opened up my eyes to a whole new piece of info I had no awareness about and thank you .
Glad to hear it, we hope you are able to check out more of our content for more quality info.
Hey Tony I went back to this video to brush up ( looking to buy another property )
and the question I have where does one go to look up all of the codes and reg's for this awesome information .Keep up the great content it's great. Thank you
Something I haven’t been able to find online. I have owned (and lived in) a property for nearly 7 years. Now, we are buying a new personal property and turning the house that we’ve lived in for years into a rental property. If we were to do a cost segregation analysis, would the basis of this analysis (and subsequent depreciation) be the purchase price from 7 years ago (130,000) or the approximate value of the house now (around 240,000)?
It's whatever you paid for it originally, plus any capital you put into it. You only use the current market value when you purchase the property for the current market value.
Toby, this was the absolute best video to understand cost segs!! Thank you first of all! Is there anyone in Michigan that you would recommend to use as our CPA or would your firm be willing to take us on to evaluate our situation with 4 rental properties that we have purchased in the past year alone, cash flowing well on all, and have set up our Trust and holding company accordingly... Much appreciate all of your time and education!
Hi Matthew, thank you for leaving your comment. You can request a free 45-minute consultation to discuss our proven asset protection and tax strategies and how they apply to your unique situation.aba.link/tobyss
MI property does not rise. Barely stays flat & tends down. At least near Traverse area. Must be worse in UP.
Am I correct ?
Great video
Thanks for watching!
Excellent information. This knowledge is gold.
If you owned a house for many years ( rental property ) and never did cost seg can you do the past 15 years now ?
@toby, please answer this! I’d love to hear your take and all the nuance involved. Thanks!
Would there be any benefit to donating to your own non-profit after the first year deduction?
Great video. The one thing I wish everyone would stop doing is referring to this as a "loophole". It is an Incentive. The government has created incentives to encourage people to buy real estate, vehicles and other goods, and offer a tax savings if they do. This is done as a stimulus to the economy. It gives people jobs and, in the case of rental real estate, it gives people places to live that other wise wouldn't exist. It is fair and effective. Politicians refer to these incentives as loopholes as a way to vilify the use and claim people don't pay tax. Thanks again, Toby!
Excellent points!
Thanks Randy. You had an elegant way of wording real estate investing.
I live in California. Do you have anyone you could refer me to that does cost segregation? Also to establish a non profit organization? Thank you so much. I've learned so much by watching your videos.
@@akemyjones4196 Check with your CPA
Very Good point
Is there deprc recapture upon sale?
How does the segregation of depreciation affect capital gain when selling the rental property?
Your cost basis is lower, so cap gain would be greater
is 1099-int on EE bonds passive or active?
Does this have the same effect on property that you've owned for over 30 years?
My wife and I retired. I made great pre-retirement decisions, and we are very comfortable and own our main home And a nearby cabin on a mountain. thinking of renting it or having a "management company" handle the rental and cleaning etc...Have No Idea what to talk to an accountant or lawyer about. Im getting hammered right now on the rising income tax on my "retirement."
This is so wonderful. We can do this on a sold property? Sold a few weeks ago, no more access. :(. Maybe we can just do an amendment on the year I bought it ?
I'm glad you found the information helpful! To provide personalized advice and explore the options available for your specific case, I recommend scheduling a free strategy session. Visit: aba.link/84a6a3
Great video! Can you recommend a cost seg professional in DFW area?
I'd recommend visiting andersonadvisors.com/csa/
Third time watching this. Forgive me if I don't use correct terminology. Can you cost seg to offset taxes owed for drawing from your IRA? Or to make contributions to a Roth IRA?
Are there any different rules for a mobile home new or used, on paid off land?
How many years can you roll over any excess from the cost seg? Isn't the IRS changing this code at the end of this year?
I'm still seriously ruminating over all this good information! Thank you!
Honestly, if you haven't started yet then it is unlikely that a cost segregation can be fully started and finalized this year anymore, unfortunately, not without some crazy efforts and convincing evidence. That being said, generally, the cost seg will offset other income being taxed so it will depend on how the IRA was pulled. If it is income tax from it then likely yes, if it is early withdrawal or fee-related, then likely no. There aren't any different rules that I'm aware of. You can continue to roll it over until used. The IRS may change things, but that is always the case and you should plan according to the current rules.
@@TobyMathis thank you so very much...I'm mentally digesting this...