Do you have a rental property and want to know how cost segregation can turn your rental into a moneymaker? Keep reading to learn more about cost segregation for rental properties.
Picture this: You pay x amount of dollars and get an immediate in after-tax cash.
We know what you’re thinking… “That’s too good to be true!” But what if we told you it isn’t? Thanks to tax reform, you can get this with a cost segregation study on your rental.
If you want a good tax reduction strategy, then a cost segregation study is the way to go! Why? It’ll accelerate your depreciation deductions, plus puts more after-tax cash in your pocket.
As with everything, there are passive loss rules you will have to examine actually see the benefits of your cost segregation study.
Here are three notes of caution you should remember:
- Ensure the cost of the study doesn’t eat up most of the tax savings
- Consider the impact of paying taxes on any property that is not considered real property if you plan to like-kind exchange your rental.
- Consider the extra income depreciation recapture taxes you will have to pay when you sell components that benefited from your cost segregation study.
If you want to learn more about cost segregation for rental properties, please don’t hesitate to contact us! MFI Works, Inc is here to help. Tell us more about your business, fill out the form here.
