Can cost segregation help off set capital gains? trying to understand
Or is it only for ordinary income?  as if I actually understand this...
[{"id": "imqnfu3", "text": "It can increase depreciation loss and help reduce taxable income by optimizing your capitalized improvements.", "replies": [], "depth": 1}, {"id": "imqpns9", "text": "And if you're a rep it can reduce ordinary income", "replies": [{"id": "imqrkun", "text": "rep?", "replies": [{"id": "imqu7vj", "text": "Real estate professional", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "imqrosk", "text": "Yes if you are not considered passive under the code(ie a RE professional).\n\nThere are limitations on how much income in total can be offset with business losses though.", "replies": [], "depth": 1}, {"id": "imqt6ge", "text": "Cost segregation is a method that accelerates depreciation by itemizing assets with shorter depreciation schedules rather than lumping The whole cost basis under the 27.5/39.5 building depreciation. For example - appliances, asphalt, landscaping, fencing, etc.", "replies": [], "depth": 1}, {"id": "imreifb", "text": "As people have said, cost segregation will itemize expenditures for accelerated depreciation. As a result, upon a sale you\u2019d actually increase capital gains because you depreciated certain assets quicker and lowered your book value.", "replies": [], "depth": 1}, {"id": "imtxf7m", "text": "yes!! \nA benefit analysis should always be free if it's not run the other way if the numbers work go forward if they don't don't go through with the study\n\n* If you're going to sell a property within three years it's typically not recommended to get a cost seg study\n\nHere is an exa:\n\nApartment Complex Garden Style, 102 units in OH, purchased in 2005\n\nPurchase price $26m (of which $2,093,729 is the depreciable basis)  \n\nOwner\u2019s 2020 depreciation expense without cost seg - $76,135\n\nOwner\u2019s 2020 depreciation expense with Owner\u2019s 2020 depreciation expense with cost segregation - $715,650\n\nCatch-up depreciation deduction of $715,650 in 2020, even 15 years after purchase.\n\nFull disclosure I work for a cost seg firm\ni'm also an investor so if you have any questions here to help!!", "replies": [{"id": "imuo8gq", "text": "Thanks!", "replies": [], "depth": 2}, {"id": "itelibb", "text": "Does cost segregation work better for commercial or residential properties? Looking to offset about 400k of income.", "replies": [{"id": "itlrkke", "text": "It very well works on both.\n\nA lot of firms don't work with clients who owns assets under $600,000 but we do\n\nEspecially because I fall into that category\n\nIf you would like a benefit analysis I would be happy to help you out there is no charge \n\njust DM me!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "imvz4ck", "text": "Can you cost seg a new roof? What about hvac rooftop units?", "replies": [{"id": "ioesyvl", "text": "If it's commercial (not residential/multifam), you can just claim 179 deductions on those types of improvements and take the loss all in that year, no need to pay a firm for cost seg", "replies": [], "depth": 2}], "depth": 1}, {"id": "ioeuy9o", "text": "It's pretty complicated, and depends a lot on your situation.  It is also harder to pull off (audit proof) than most would believe.\n\nIt's all about transforming your passive income (from your rental) into active income (like basically all your other income).\n\nThen you are taking active losses, against active gains. It's weird, but the IRS considers cap gains from the stock market to be \"non-passive\".\n\nTo do this, you typically need to qualify as a real estate professional. This is outlined in section 469 of the IRC.\n\nRead this: \n\nhttps://www.currentfederaltaxdevelopments.com/blog/2022/4/21/ce2rlotpoufqnfkeyafc7yqg4voogd\n\nBasically, you are a developer, broker, flipper, etc. You spend a certain amount of hours in that trade. Then, on top of that, you have some rentals that you \"materially participate\" in (meaning you are the property manager, or you do the most work in the rentals). \n\nThere are ways to generate losses from syndications, but it gets complex.\n\nI would speak with a savvy CPA who understands all the rules so you don't get yourself into trouble. People trying to shelter tax with real estate professional status seems to be a lightning rod for getting audited. \n\nOne way around the \"real estate professional status\" is to buy short term rentals. The IRS considers your STRs to be active income if you are the one managing the properties. You still need to demonstrate that you materially participate in those properties though.", "replies": [], "depth": 1}, {"id": "iq446l0", "text": "not directly, overall you are reducing your tax burden by doing a cost segregation study https://ics-tax.com/services/cost-segregation-studies/", "replies": [], "depth": 1}]