All Forum Posts by: Bernard Reisz

@Michael Plaks Honored to be mentioned by you, as always!

@Shane Craig Michael's posts are required reading for those looking to truly understand the pros and cons of Cost Segregation. Highly recommended reading for all real estate investors and their tax advisors! 

@Michael Plaks Your post should be half as long! 😜

@Michael Plaks MACRS retained the same "depreciation" concepts as ACRS, just with a limited attempt to bring it more in line with realty.

@Michael Plaks I made it about half way through post... and then switched to the Starbuck menu!

Amazing post, as always! Required reading for real estate investors, really.

Allow me to indulge in some self-quoting to illustrate that Congress did not lose their marbles, but rather wanted to spur economic investment by divorcing "depreciation" deductions from reality, perhaps indicating that, on the contrary, whoever came up with these rules was a real estate investor! 😊

Essentially, Congress is allowing "cost recovery" deductions without regard to obsolescence.

ACRS eliminated salvage value, minimized exceptions and elections, and moved away from the useful life concept.

ACRS allowed depreciation deductions for recovery property over a predetermined recovery period by applying a statutory percentage to its basis (cost).

Under ACRS allowed "depreciation deductions" no longer correspond to literal depreciation.

Since ACRS is not based on estimated useful lives, cost recovery under it may not technically qualify as "depreciation" in its literal sense, and the term "depreciation deductions" is used for convenience. In other words, ACRS is the end of true depreciation tax deductions!

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@Kyle Swengel It's all about using an integrated suite of real estate tax tools, as applied to a particular investor's tax profile. 

As you point out, Cost Seg and 1031 can complement each other very nicely. Of course, as you emphasize, having a real estate focused CPA is key to unlocking the upside, and avoiding unintended consequences, of tax tool implementation.

@Kyle Swengel Kudos for being thoughtful and proactive about your taxes!

As someone with a CPA background, I emphasize more than anyone (perhaps with the exception of the truly amazing @Michael Plaks) that a nuanced approach is required for tax tool implementation. The ROI on tax tools varies greatly from investor to investor and hinges on several variables, some of which can be objectively analyzed by a real estate tax expert and some of which require some subjective analysis (for which a real estate tax expert can provide valuable context).

There are really 2 "no brainer" steps to take to get clarity for an informed decision:

1 - Read Michael Plaks' posts about this topic. With just a bit of reading you will be way more informed than any non real estate focused accountant.

2 - Get a free Cost Seg feasibility analysis for your property.

Armed with the info from those steps you'll be able to make informed decisions about how to move forward.

@Michael Plaks Honored by the mention, coming from one of the foremost real estate tax experts in the nation! 

@Pierre E. Definitely recommend reading the posts that Michael references before getting a cost seg study done. A cost seg illustration/report can not fully capture how your personal taxes will be impacted by cost segregation and Michael's posts will make you an informed consumer of tax services. In fact, our preference is to work with investors that have great tax guidance, so that we can be confident that we're delivering a service that is optimally matched to investors' tax strategy.

@Michael Plaks Always an honor to be mentioned by you (and in great company)!

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