How to reduce my active income tax liability? Bonus depreciation?

[Donald F.]

I have appx $250k worth of active income this far (commercial real estate broker), and I have another $300k in income coming (though I am rolling my fee as equity into the deal so it will not be reported as income on my tax return this year). 

What are the best ways to offset the huge majority of that $250k income I have? I was thinking bonus depreciation. However, I wanted a better idea of how much I would be able to offset. Hypothetically, if I invested $200k into an $800k duplex/triplex (financed $600k), what % of that do you think could typically be depreciated in year 1?

If you have any other creative tax incentives/ideas of how I can reduce my tax liability this year, I'd really appreciate it! Thank you.

[Bonnie Griffin Kaake]

@Donald F. This is a specialty area of taxation. There are many tax and cash-flow benefits available all during the ownership of a commercial or residential rental property. It appears that you are in the 24% tax bracket. If you do a cost segregation study on the hypothetical $800k duplex/triplex, you can expect about 30-40% of the purchase price will consist of tangible property that can be depreciated in year one. You can usually count on about 6-10% of your purchase price in after tax cash-flow the first year. That is about $48k to $80k in taxes you don't have to pay and can reinvest. The American Institute of CPAs (AICPA) recommends to their member CPAs that a cost segregation study is done on EVERY property over the purchase price of $750k. It is usually beneficial for any commercial or residential rental over the purchase price of $200k. Our range nationally is $200k to $2 billion in purchase price. CSSI and I teach CPAs/tax professionals how to leverage tax benefits for their clients. 

There are many other benefits available to commercial property owners and I would be happy to talk to you about additional benefits of getting a cost seg done and beyond. Under the current administration, leveraging the available tax benefits is going to be even more important for commercial property owners. And, doing it with an engineering-based study (IRS' preferred methodology) with audit defense included, is going to be even more important. The IRS is currently hiring thousands of young aggressive and technically savvy tax professionals. Audits of depreciation schedules will be on the rise. Why pay more in taxes than you need to pay? Reinvest that bonus at a more lucrative rate of return than letting that money sit with the IRS.