so you loose a future benefit for the gratification of the current tax year and then if you sell early you have depreciation recapture? So would the strategy be to buy property every year?
Say there's a married couple, one is a real estate professional and the other works a regular W2 job and they file their taxes jointly. If they have enough real estate depreciation to exceed both the cashflow from their properties and the income of the spouse working with real estate, could the remaining depreciation be applied to the spouse's income from their unrelated W2 job if they file jointly? Thanks
Hypothetically, yes. However, do not rely on this as tax advice and please get a CPA involved if you are strongly considering this. There are several additional items to consider. You can apply to work with Sherman @ mycpacoach.com
Essentially yes. Short term rentals with an average stay of 30 days or less have to be depreciated over 39 years instead of 27.5. In addition to the building value portion of the purchase price, you can also add some other costs like certain closing costs, major renovation costs, and some expenses that occur before the property is placed in service as a rental. Mortgage loan costs can be "amortized" over the term of the loan, which is similar to depreciation.
It means you saved $44,400 in taxes if you are in the 37% tax bracket. It’s a simplified example to illustrate the value of finding a $120,000 tax deduction through accelerated depreciation.
I do not believe his comments regarding depreciation recapture are correct. Recaptured depreciation is taxed at ordinary income tax rates. Any amounts above that are taxed as a capital gain.
I think he may have just been simplifying things a bit for the purposes of this video. But yes, depreciation recapture is taxed at your ordinary income tax rate rather than your (lower) long term capital gains tax rate. But also, recapture of real estate depreciation is capped at 25%, so it will be 25% at most even if your ordinary income tax rate is higher. But that doesn't include anything that's in the accelerated deprecation categories if you do a cost seg study, that portion of your gains doesn't have the 25% upper cap. That's one of the drawbacks of doing a cost seg study.
Useless advice. A ceiling fan brand new is like $300. You want to hire someone for a cost seg study to let you know your used fan is now worth $80. Kitchen range $100, water heaters $250 etc? They are worthless used. Your example over exaggerated the "value" of these fixtures so dumb investors will buy into whatever you are trying to sell. No one buys a $500k will get $150k worth out of a seg study. Don't do it unless you own a shopping mall or 10 unit apartment.
Watch Next: How to Use Real Estate to Avoid Income Taxes th-cam.com/video/jS1p7SBcN4A/w-d-xo.html?
Very professional and nicely explained
Good stuff well presented. Thank you
Love it! Thank you
Thank you for this!
Very helpful!
In depth video !
Can you recommend an accountant in Georgia or Alabama does Cost Segregation Studies?
How often do you have to get a cost seg study? Do you have to do it every year?
so you loose a future benefit for the gratification of the current tax year and then if you sell early you have depreciation recapture? So would the strategy be to buy property every year?
In depth
Please send qualification as a Realtor on how to apply my real estate losses against my real estate income.
What vendor do you use to make your cost segregation studies?
Please send me information on real estate professionals
The best tax practice for re investing
Definitely a powerful tax strategy.
Who is the cost seg company he useo
except that 1031 exchange isnt allowed any more.
How do I qualify as a real estate professional video
Say there's a married couple, one is a real estate professional and the other works a regular W2 job and they file their taxes jointly. If they have enough real estate depreciation to exceed both the cashflow from their properties and the income of the spouse working with real estate, could the remaining depreciation be applied to the spouse's income from their unrelated W2 job if they file jointly? Thanks
Hypothetically, yes. However, do not rely on this as tax advice and please get a CPA involved if you are strongly considering this. There are several additional items to consider. You can apply to work with Sherman @ mycpacoach.com
Do y'all do like 1 hour consultations? I got a few questions
Sherman has 1 or 2 client seats left. You can apply to work with him directly at mycpacoach.com/
If I opt to use cost segregation depreciation, would I no longer be able to claim my straight line depreciation?
straight line remains in tact or everything that was not accelerated. so 100k property- 20k is accelerated = 80k stays straight line
It wouldn’t be purchase price divided by 27.5. It is the building value(not the land) divided by 27.5. Is that right?
Essentially yes. Short term rentals with an average stay of 30 days or less have to be depreciated over 39 years instead of 27.5. In addition to the building value portion of the purchase price, you can also add some other costs like certain closing costs, major renovation costs, and some expenses that occur before the property is placed in service as a rental. Mortgage loan costs can be "amortized" over the term of the loan, which is similar to depreciation.
Bonus depreciation is for real estate professionals. Important you mention that.
Bonus depreciation is for anyone who owns a business and who uses a vehicle that is used at least 50% for business purposes.
on 5:05 mark, does that means you're only paying $75,600 in taxes?...or are you PAYING $44,400 in taxes??....
It means you saved $44,400 in taxes if you are in the 37% tax bracket.
It’s a simplified example to illustrate the value of finding a $120,000 tax deduction through accelerated depreciation.
Know any people that are interested in this ?
I do not believe his comments regarding depreciation recapture are correct. Recaptured depreciation is taxed at ordinary income tax rates. Any amounts above that are taxed as a capital gain.
I think he may have just been simplifying things a bit for the purposes of this video. But yes, depreciation recapture is taxed at your ordinary income tax rate rather than your (lower) long term capital gains tax rate. But also, recapture of real estate depreciation is capped at 25%, so it will be 25% at most even if your ordinary income tax rate is higher. But that doesn't include anything that's in the accelerated deprecation categories if you do a cost seg study, that portion of your gains doesn't have the 25% upper cap. That's one of the drawbacks of doing a cost seg study.
Very informative video upon taxes!🔥 will it be okay If I send you an email; I want to connect
Useless advice. A ceiling fan brand new is like $300. You want to hire someone for a cost seg study to let you know your used fan is now worth $80. Kitchen range $100, water heaters $250 etc? They are worthless used. Your example over exaggerated the "value" of these fixtures so dumb investors will buy into whatever you are trying to sell. No one buys a $500k will get $150k worth out of a seg study. Don't do it unless you own a shopping mall or 10 unit apartment.