Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Tax, SDIRAs & Cost Segregation
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 2 years ago,

User Stats

10
Posts
6
Votes
Mayank Jain
6
Votes |
10
Posts

What happens after the period of cost segregation study completes?

Mayank Jain
Posted

Hey folks, 

I have a fun question on cost segregation study, around which I am trying to build a house hack thesis.

Scenario
Lets say, we have a $1M property ==> Building cost : $800k, land cost : $200k

Now we do a cost segregation study, with following outcome

- $100,000 of interior fixtures and finishes that can be depreciated over 5 years
- $100,000 of interior fixtures that can be depreciated over 7 years
- $100,000 of land improvements that can be depreciated over 15 years

Using a straight line depreciation on cost segregation data, we get
- Building ($500,000 / 27.5 years): $18k
- 5-year property bucket ($100,000 / 5 years): $20k
- 7-year property bucket ($100,000 / 7 years): $14k
- 15-year property bucket ($100,000 / 15 years): $5k

    Total first-year depreciation : $57k

    Questions
    - Do my 5, 7, 15 year property materials cease to provide depreciation after their relevant cost segregation depreciation period is over? (For example in Year 6, I cannot use any depreciation from 5 year bucket)?
    - After year 15, am I just depreciating the building?
    - Is the attached screenshot a correct way to understand the cost segregation study?
    - Is cost segregation study performed only once in year-1 and its values used over and over until 29.5 yrs OR can I perform the study every year? Does it even make sense to perform every year if there's no material change in artifacts used in 5/7/15 yr buckets?

    Many thanks!

    Loading replies...