Discover how to apply cost segregation and other tax saving tools to your commercial properties by applying to our Protege Program: www.commercialpropertyadvisors.com/protege-program
Mr Harris, you are a inspiration, the education on Commercial Real Estate is invaluable, I am seriously considering buying my first Commercial property and with your education I feel more informative on my upcoming purchase. God Bless You Mr Harris
If you have already filed a tax return on a property purchase, (like a purchase in 2021) you can still do a cost study, but the IRS consideres it a change in accountiing, so a 3115 form needs to be filled out.
Hello. I appreciate the extensive info, yet simple explanation; on this video. I may have to watch it over and over to grasp it in my brain. I am planning to invest in real estate soon. God bless you! New follower!
Great video, thank you for sharing your expertise! I have 6 SFRs rentals, 1 quad, and 1 flip house. I'm selling them all this year in 2 groups. Planning to 1031 into commercial apartment buildings then do the cost segs. I'm a RE professional and my wife has a w2 making 60k/yr. Cost Seg to offset flip income and w2 income. I'm also looking to find apartments where I can add value. What are the most common potholes I should look out for with this strategy and the process of executing it? Appreciate any feedback. Thanks again!
Hi, You can pass on cost segregation benefits onto your W2 ONLY if you are real estate professional. Otherwise, it can be applied only to what you make from that property. That significantly reduces the tax advantage. Is that right?
Hey Peter. I was reading something about what can affect the cap rate on a commercial property. Long story short, this is what i read: Properties that are selling at or below replacement cost tend to command lower cap rates (higher prices) than those selling above replacement costs because there is less risk that a new investor would build a comparable property from scratch and lease it for similar rates. My question is: if a property is selling at or below replacement cost tend to have a lower cap rates (higher prices). Doesnt that remove the advantage that the property is at or below replacement cost since its now more valuable?
@@Destroyer-vd8rl Speak with a CPA on UA-cam there is another accountant named Carlton he also has many great videos and some on cost segregation That might help. I’m not sure about the wording of your question but I think I understand what you are asking .
I love your videos because I intend to get into commercial real estate but currently I'm in small multifamily and single family. Would this be something worth doing if the properties are no more than $100,000 each? I ask because I know there's some upfront costs for the cost segregation study.
It'll depend on the cost of the study relative to your potential tax savings. If it costs $4,000 for the study and you save $4,000 in taxes, it's obviously not worth it.
I have a question: Are 10 investors limited partners or general partner? If they are limited partner, can this passive income 210K be off-set their active incomes or the total off-set limit is up to 150K for non real estate professional?
If you use the segregated funds that roll over each year to offset your taxable income, will that bring your AGI down? Will that make it to where, on paper, it shows your AGi is low and therefore wouldn’t be able to qualify to buy properties?
if you've owned a building for 15yrs and considering selling it in 2022-23 is there any benefit to doing a cost seg this year to get the writeoff before selling it?
Can you still do bonus depreciation if it’s not your first year of owning the property? How do you do that? And I assume you can do all of this on residential or commercial property, right?
Could this negatively impact you if your personal property is reported at let's say $20k, but the study says it's worth $150k, or does the county tax assessor not receive this Cost seg study, and just the IRS does?
Question: So 20% of the value of the Building is the value that will go towards the undpreciated value of LAND. 80% Building Value ( Asset ) 20% Land Value (Asset) Is the percentage split a rule of thumb by law a 20% ?
Great explanation, Thank you. Is it possible to utilize both cost segregation and bonus depreciation for a recently acquired property that was obtained through a 1031 exchange?
Question: as a new buyer of a property, does it matter if the previous owner took the tax benefits in the house? For example, I buy a home that someone already took a tax break when they purchased the home a few years ago?
In your example with having the 10 investors, you mentioned each investor receiving 210,000. But then also mentioned if they only made 80,000 that year that they could use the 210,000 to offset their 80,000 income to having to pay 0 tax and roll over the remaining 120,000 to the following year. In the example you give prior you mentioned you would get those funds back and could use them to buy another property. So im just confused on that part. Can you get the funds paid to you by the IRS or does it just roll over to the next year?
This is gold!! I like your presentation and your teaching style, I believe perhaps you were a teacher before being a real state investor? I like this video and will watch again and again until I understand it. Too bad the bonus depreciation is being face down this year... but nevertheless is still a great tax strategy!!
Can cost segregation my single short term rental, I’m disabled vet and I don’t pay taxes but now I’m doing short term rental and worried that they might to say I owe taxes.
Do you have to be a real estate professional to be able to use the depreciation to offset your ordinary income? For example lets say someone makes 300K w2 or in their business and they buy a commercial building can they take the loss on their income or is it only on real estate income?
Yes, you have to be a real estate professional to offset your ordinary income, which is damn near impossible if your a W2 earner that does work outside of real estate. To be considered a real estate professional by the IRS, you have to materially participate in your real estate business AND meet the requirements of a RE professional, on top of your W2 job - basically theres not enough hours in a day. Rental Real Estate activities are per se passive, so unless you're a real estate professional any losses are categorized as passive losses and are limited based on modified adjusted gross income. If your MAGI is 100k or less, you maybe be able to take $25k in losses per year, but this is completely phased out when your MAGI is above $150k. Passive losses can only offset passive income. This guy's explanation of reducing your $200k AGI by $300k in bonus depreciation to get a $100k tax refund is complete asinine bullshit.
Love your videos. But I have a few questions. Isn't the depreciation on commercial 39 years, not 27.5 years? Also, wouldn't you need to be a real estate professional to be able to capitalize on this? I'm in the journey of building my portfolio and wasn't sure if I'd benefit on the high of a depreciation in the first year, considering I need to qualify for more mortgages. I alsi believe you wouldn't get a check for $10k but you carry it forward to the following year. Please correct me if I'm wrong since this is the info I've learned in other educational videos. Thanks
Dwellings are 27.5 years, whether 1 unit of 200 units. It's still considered "residential" per IRS depreciation guidelines. And if you are NOT considered a "real estate professional" per the IRS, then you can roll the extra depreciation to future years or if you owned the property for up to 3 years and took straight line depreciation the previous 3 years, you could amend your previous returns and take the new cost seg accelerated depreciation.
Yes commercial is 39 years. 95% of his videos only talk about apartments(residential). I play in the industrial side. Always ask your CPA and or attorney before you do anything from someone off UA-cam. He gives out a lot of good information but you still need to check with your team to make sure you do it correctly and legally to the irs code.
What do you mean by the skill set to "take this money and multiply it"? Are you saying to take the huge accelerated/bonus deduction, which should give you more money in pocket (via lower tax bill) to then use that money go and buy another commercial property and do cost segregation again and keep repeating that process?
@@CommercialPropertyAdvisors you misunderstood my question. A real estate professional “shouldn’t pay any income tax.” If that’s the case then how do you get a large refund? A refund is a function of how much you overpaid in income tax.
@@LT_YTC This can happen with a married couple. The high W2 income earner would not qualify as the Real Estate Professional for tax purposes, the spouse would.
I bought a $530,000 commercial building and squeezed this in the last week of December! I’m sooooo excited to learn how much I’m Going to save in taxes!
It worked out really well for me. I think we saved around, and I am trying to remember, around $70,000 in taxes. I had a large sale and it was better to do this than pay get the cost savings over time.@@OpenandShutCase
Discover how to apply cost segregation and other tax saving tools to your commercial properties by applying to our Protege Program: www.commercialpropertyadvisors.com/protege-program
Mr Harris, you are a inspiration, the education on Commercial Real Estate is invaluable, I am seriously considering buying my first Commercial property and with your education I feel more informative on my upcoming purchase. God Bless You Mr Harris
Dang, you did a good job explaining this. I watched like 10 videos and nobody even came close. Thank you so much!
All your videos have been tremendously helpful. I'm liking random videos now just to help boost your page. Great job Pete!
I wish I searched and found you 13 years ago!!! Great video, thank you
You are here now and that is what matters.
If you have already filed a tax return on a property purchase, (like a purchase in 2021) you can still do a cost study, but the IRS consideres it a change in accountiing, so a 3115 form needs to be filled out.
Thank you for the thorough explanation. Best video on the subject I’ve come across
Hello. I appreciate the extensive info, yet simple explanation; on this video. I may have to watch it over and over to grasp it in my brain. I am planning to invest in real estate soon. God bless you! New follower!
This man can teach.🙏
Thanks so much! This was very helpful!
great video. very well explained. thank you.
Wonderful explanation thank you for sharing, you are a great teacher
You're very welcome!
Great video, thank you for sharing your expertise! I have 6 SFRs rentals, 1 quad, and 1 flip house. I'm selling them all this year in 2 groups. Planning to 1031 into commercial apartment buildings then do the cost segs. I'm a RE professional and my wife has a w2 making 60k/yr. Cost Seg to offset flip income and w2 income. I'm also looking to find apartments where I can add value. What are the most common potholes I should look out for with this strategy and the process of executing it? Appreciate any feedback. Thanks again!
Hi, You can pass on cost segregation benefits onto your W2 ONLY if you are real estate professional. Otherwise, it can be applied only to what you make from that property. That significantly reduces the tax advantage. Is that right?
mr harris, i love your content. the best on the market. one question. can i also write off the cost of the cost segregation study? thank you kindly.
ABSOLUTELY!
May God bless you sir! Thank-you for you time and information!
POWERFUL!!! Always GREAT content.
I own a multifamily apartment building in NYC, I wish I had this knowledge when I purchased it many years ago.
Excellent video, Peter. You are really a blessing to the world. But what do you think about the 1031 exchange? It was rare that you didn't mention it.
It's a WONDERFUL tool and I strongly recommend it. Here is my video on that topic: ua-cam.com/video/-zBXsOAuW8g/v-deo.html
You’re a blessing in disguise. You’re like the Mr. Miyagi of Tax Strategy 😂
Nice work as usual Peter!!! Appreciate your guidance
Yes, you did make it simple, thanks a bunch!
Great explanation of information! Action time
Great video. Thank you. Really made this information digestible
Great video Peter. Thank you!
thank you . very help full content peter.....
Beautiful video🎉🎉
Excellent video! Thank you!
Great video and instructor.
Phenomenal video!
I’m behind on taxes for a few years and wondering if I can still do this for my rentals that I purchased a few years ago
Hey Peter. I was reading something about what can affect the cap rate on a commercial property.
Long story short, this is what i read: Properties that are selling at or below replacement cost tend to command lower cap rates (higher prices) than those selling above replacement costs because there is less risk that a new investor would build a comparable property from scratch and lease it for similar rates.
My question is: if a property is selling at or below replacement cost tend to have a lower cap rates (higher prices). Doesnt that remove the advantage that the property is at or below replacement cost since its now more valuable?
This
Did you ever figure it out
@@luisarevalo8394 no i never figured it out :(
@@Destroyer-vd8rl Speak with a CPA on UA-cam there is another accountant named Carlton he also has many great videos and some on cost segregation
That might help. I’m not sure about the wording of your question but I think I understand what you are asking .
Awesome freaking video!!!!! Thank you
Our pleasure!
Fantastic content!!
I love your videos because I intend to get into commercial real estate but currently I'm in small multifamily and single family. Would this be something worth doing if the properties are no more than $100,000 each? I ask because I know there's some upfront costs for the cost segregation study.
It'll depend on the cost of the study relative to your potential tax savings. If it costs $4,000 for the study and you save $4,000 in taxes, it's obviously not worth it.
I have a question: Are 10 investors limited partners or general partner? If they are limited partner, can this passive income 210K be off-set their active incomes or the total off-set limit is up to 150K for non real estate professional?
Thank you.
my understanding is that you can't use it to offset non real-estate income or active income..... is that correct?
Did you find out ?
Nice video
Glad you enjoyed it!
If you use the segregated funds that roll over each year to offset your taxable income, will that bring your AGI down? Will that make it to where, on paper, it shows your AGi is low and therefore wouldn’t be able to qualify to buy properties?
Thank you so much I got it now
Thanks !
Can this apply to individual properties??
if you've owned a building for 15yrs and considering selling it in 2022-23 is there any benefit to doing a cost seg this year to get the writeoff before selling it?
Thanks great video .. question does this include if own a commercial property with a triple net lease on it. ? Thanks again!
Can you still do bonus depreciation if it’s not your first year of owning the property? How do you do that? And I assume you can do all of this on residential or commercial property, right?
Thank you💯
Are the advanced and bonus depreciation strategies applicable to single unit (eg condo) investment properties?
Yes
Do you have a video to explain deprecation recapture?
Hi Peter, thank you for doing this video. It is a very important topic. Is bonus depreciation and cost segregation going away because of Biden?
Can i use cost segregation to write of taxes if im flipping houses and i save one house as a rental?
Could this negatively impact you if your personal property is reported at let's say $20k, but the study says it's worth $150k, or does the county tax assessor not receive this Cost seg study, and just the IRS does?
Question: So 20% of the value of the Building is the value that will go towards the undpreciated value of LAND.
80% Building Value ( Asset )
20% Land Value (Asset)
Is the percentage split a rule of thumb by law a 20% ?
It's a rule of thumb that Certified Public Accountants use.
The income limits apply after your AGI or before?
Great explanation, Thank you. Is it possible to utilize both cost segregation and bonus depreciation for a recently acquired property that was obtained through a 1031 exchange?
The short answer is yes
Question: as a new buyer of a property, does it matter if the previous owner took the tax benefits in the house? For example, I buy a home that someone already took a tax break when they purchased the home a few years ago?
It doesn't matter.
In your example with having the 10 investors, you mentioned each investor receiving 210,000. But then also mentioned if they only made 80,000 that year that they could use the 210,000 to offset their 80,000 income to having to pay 0 tax and roll over the remaining 120,000 to the following year. In the example you give prior you mentioned you would get those funds back and could use them to buy another property. So im just confused on that part. Can you get the funds paid to you by the IRS or does it just roll over to the next year?
I came here with the same question. He says yiu get the $120 ok straight up. But I would think the losses would just roll over
Do you work with Canadian Investors
Do you really get a refund? (your comment at 6:41). I think these go into NOLs right?
I invest in real estate on the side of my primary job. Can I use cost segregation to offset my W2 income?
So after 5 years you cant depreciate the building plus get depreciation recapture once you sell it?
Thank you Mr. Harris!
What business License do I need for the property to write off Cost Segregation?
This is gold!! I like your presentation and your teaching style, I believe perhaps you were a teacher before being a real state investor? I like this video and will watch again and again until I understand it. Too bad the bonus depreciation is being face down this year... but nevertheless is still a great tax strategy!!
How does doing a cost segregation reduce insurance?
can you do this technique with Single Family? how do i set up a consultation with You or Your Company?
Does the tax write off last past 5 years or does it have to be consumed by the end of year 5?
Mr. Harris can you recommend a tax person or how do I find one? I live in Orlando Florida
What’s the income cut off for cost segregation?
Can cost segregation lower the taxes paid on w-2 income sir
I have that same question. Can I use the cost segregation/ bonus depreciation to lower my W2 Income?
Ask your CPA. It depends
Can cost segregation my single short term rental, I’m disabled vet and I don’t pay taxes but now I’m doing short term rental and worried that they might to say I owe taxes.
1031 to avoid debt recapture?
Do you have to be a real estate professional to be able to use the depreciation to offset your ordinary income? For example lets say someone makes 300K w2 or in their business and they buy a commercial building can they take the loss on their income or is it only on real estate income?
Yes, you have to be a real estate professional to offset your ordinary income, which is damn near impossible if your a W2 earner that does work outside of real estate. To be considered a real estate professional by the IRS, you have to materially participate in your real estate business AND meet the requirements of a RE professional, on top of your W2 job - basically theres not enough hours in a day. Rental Real Estate activities are per se passive, so unless you're a real estate professional any losses are categorized as passive losses and are limited based on modified adjusted gross income. If your MAGI is 100k or less, you maybe be able to take $25k in losses per year, but this is completely phased out when your MAGI is above $150k. Passive losses can only offset passive income. This guy's explanation of reducing your $200k AGI by $300k in bonus depreciation to get a $100k tax refund is complete asinine bullshit.
Can you depreciate the actual land? I thought that’s a no.
In this example… can the bonus depreciation count toward my ordinary income?
Watch this Video: ua-cam.com/video/tsiVsq78qO0/v-deo.html
Hi Peter. When you do a cost segregation! It Complicates the 1031 exchange process? Correct?
Not necessarily since all of that depreciation recapture is deferred
Love your videos. But I have a few questions. Isn't the depreciation on commercial 39 years, not 27.5 years?
Also, wouldn't you need to be a real estate professional to be able to capitalize on this? I'm in the journey of building my portfolio and wasn't sure if I'd benefit on the high of a depreciation in the first year, considering I need to qualify for more mortgages. I alsi believe you wouldn't get a check for $10k but you carry it forward to the following year. Please correct me if I'm wrong since this is the info I've learned in other educational videos. Thanks
Dwellings are 27.5 years, whether 1 unit of 200 units. It's still considered "residential" per IRS depreciation guidelines.
And if you are NOT considered a "real estate professional" per the IRS, then you can roll the extra depreciation to future years or if you owned the property for up to 3 years and took straight line depreciation the previous 3 years, you could amend your previous returns and take the new cost seg accelerated depreciation.
Yes commercial is 39 years. 95% of his videos only talk about apartments(residential). I play in the industrial side. Always ask your CPA and or attorney before you do anything from someone off UA-cam. He gives out a lot of good information but you still need to check with your team to make sure you do it correctly and legally to the irs code.
What do you mean by the skill set to "take this money and multiply it"? Are you saying to take the huge accelerated/bonus deduction, which should give you more money in pocket (via lower tax bill) to then use that money go and buy another commercial property and do cost segregation again and keep repeating that process?
Bingo
@@CommercialPropertyAdvisors does this only work with what is considered a commercial property or can i do it with my 2-unit multi family property?
Just to confirm, can a hotel owner file as a real estate professional?
How can depreciation recapture effect investors?
If the strategy is to not pay income tax then how would you get a big refund?
If you were a W2 high income earner, your employer may deduct income taxes with each paycheck.
@@CommercialPropertyAdvisors you misunderstood my question. A real estate professional “shouldn’t pay any income tax.” If that’s the case then how do you get a large refund? A refund is a function of how much you overpaid in income tax.
@@LT_YTC This can happen with a married couple. The high W2 income earner would not qualify as the Real Estate Professional for tax purposes, the spouse would.
Would you still have depreciation recapture if you owned the property for 5+ years ?
Yes, if you sold it. If you did a 1031 exchange, you would defer that recapture.
Hi Peter, how is the person/investor making $80k effected by the "cons" in your example?
The con would be that if they sell, there is more depreciation recapture.
Great explanation. Just reached out to a cost segregation company to get started to reduce my tax liability
Mr. Harris, on Depreciation Recapture (which happens upon the sale of the property), can the seller avoid that by offering seller financing?
Not seller financing; but a Master Lease Agreement would work.
Use a 1031 exchange
What if I've had my property for 20 years already?
Good question for an accountant.
One thing he did not cover, and check with your Cost Seg pro - is that you can do this retroactively! Ask me how I know lol
I bought a $530,000 commercial building and squeezed this in the last week of December! I’m sooooo excited to learn how much I’m
Going to save in taxes!
How did it work it for ya Brad?
It worked out really well for me. I think we saved around, and I am trying to remember, around $70,000 in taxes. I had a large sale and it was better to do this than pay get the cost savings over time.@@OpenandShutCase
Isn't the depreciation for commercial properties spread out in 39 years?
Dwellings are 27.5 years, whether 1 unit of 200 units. It's still considered "residential" per IRS depreciation guidelines.
omg your the man
What if I only own 1 commercial building?
I also rent this to myself?
IT'S HARD AS HELL TO GET INTO YOUR PROGRAM. WHERE TO SIGN-UP?
Apply to my protege program here: www.commercialpropertyadvisors.com/protege-program
Then the next four years you are paying jacked up taxes. Congrats!
Anyone don't this and can recommend a company in NJ?
Ha Ha, Ya, I’m sure Donald utilizes Cost segregation on top of lying about value of properties