Cost Segregation worth it without being RE Pro?

[Matt Leber]

Hello BP,

I’m a long term rental property investor who just listened to a recent podcast episode that go me thinking more about cost segregation. I haven’t done one in the past but have 7 rentals. I am trying to understand if it may be worthwhile to do a cost seg based on my 2022 transactions. I am not a real estate professional and neither is my spouse. We both work w2s.

2022: sold 2 duplexes in Jacksonville and 1031x into 2 single family homes in Ocala (around 200k each) and 1 single family home in Melbourne FL (650k). All 3 newly acquired SFH are long term rental properties. The home in Melbourne FL may become a primary residence at some point in the future if family circumstances change.

Would it make sense to get a cost segregation study on the 3 homes acquired in 2022? Or not worth it due to purchase price/1031/not being a real estate professional status/cost of the seg study? Thanks!

[Ashish Acharya]

Your basis is already lower than you expected because of the 1031 exchange. the old basis carries over. We wish we could give you a concrete answer here without knowing the numbers. 

Is it beneficial without being RE pro, yes, depending on what is your investment strategy, especially in the next few years.