Cost segregation is a powerful tax strategy that allows property owners to significantly reduce their income tax liability by accelerating depreciation deductions.

In this episode, I sit down with Yona Weiss, a renowned expert in cost segregation, to unpack what this strategy entails and how it can benefit real estate investors. Yona explains that cost segregation involves breaking down the components of a property to identify those that depreciate faster than the standard timeline, enabling owners to front-load deductions and improve cash flow.

We also discuss the nuances of when cost segregation is appropriate and the potential pitfalls to avoid, particularly regarding property types and holding periods. Listeners will gain valuable insights into the mechanics of cost segregation and how it can be a strategic tool in their real estate investing journey.

Takeaways:

• Cost segregation is a tax strategy that allows property owners to accelerate depreciation, thus reducing taxable income significantly.
• Yona Weiss explains that cost segregation involves breaking down properties into components that depreciate at different rates, allowing for larger deductions upfront.
• Investing as a limited partner can be advantageous for those who prefer not to manage properties themselves, as it allows them to focus on their strengths.
• It's essential to consult with a CPA before implementing cost segregation, as it may not be suitable for every property or investor situation.
• A key consideration for using cost segregation is whether the property is held long-term or short-term, as flipping properties may not benefit from this strategy.
• Real estate professionals may leverage cost segregation to offset active income, which can provide substantial tax savings compared to passive investors.

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