All Forum Posts by: Bonnie Griffin Kaake

@Keith Mintz  Don't forget that with a 1031 exchange into a residential rental or commercial property that a cost segregation study can also help you increase your tax benefits and cash-flow. The increase in basis is a candidate for a good engineering-based cost segregation study. Let me know if you need more information. 

@Artur A.   I have traveled all over Mexico and one of the places you did not mention was San Miguel de Allende. Large expat community and popular with tourists. I have traveled there and have friends there. 

@Justin Crump  You need a good cost segregation company as part of your team to maximize your tax benefits and cash-flow. I am here in Colorado as well. Let's talk. 

@James Likis  Getting a no-cost cost segregation estimate is your best bet on every property you purchase as soon as you purchase it or even when you are considering a purchase. Then, you have the information you need to make good decisions. Be sure you are using an experienced company that provides engineering-based studies which require site surveys inside and outside the building. 

The bonus depreciation is based on the year of purchase no matter when you do the cost segregation study. The downside of waiting is that you don't have that extra cash-flow up-front. You will be depreciating 1/27th or 1/39th of the purchase price minus land value each year under standard straight-line depreciation.

Once you become a real estate professional, your properties become active investments and the paper losses can be used against other active income. All depreciation resulting from a cost segregation study can be rolled forward to future years until you have used all of it. The highest benefit from a cost seg study usually comes when your income is at its highest as well. Remember, passive losses, when created by cost seg studies can be used against other passive gains.

BTW, don't expect your CPA/tax professional to know a lot about cost segregation. It is a complex special niche that applies to commercial properties owned or leased and residential rentals. The RE savvy CPAs are few and far between...even those know better than to take the risk themselves and refer you to a trusted source or expect you to find a reputable cost seg firm yourself.That is why getting your information on BP is so valuable. Let me know if I can be of help. 

Quote from @Jon Fletcher:

Does anyone have an example Excel Sheet for a bonus depreciation schedule? Just something simple, for example, $1MM purchase, with 10% allocated to the land value. The remaining $900k split between 5-Year (15%), 7-Year (5%), and 39-Year (80%). It would be helpful to have a spreadsheet to play around with. 

Hi Jon, as a cost segregation specialist, I wish there was a simple formula. First, I will say that it is a rare property that has a 10% land value. I have seen them range from 20% to 90% of the purchase price. Why try to guess when all you have to do is get a no-cost, no obligation estimate. You will usually have your answer on a specific property you own or are considering in about 1-3 days and save yourself all the brain damage. Cost segregation is a complex process when it is done correctly and with the least risk of audit. Every property is unique.

@Travis Tinnes  I am also in the Denver Metro area but help owners of investment properties all over the country. @Ben Einspahr gave you some great information about the availability of STR properties here. I would add to that the fact that STRs here are much more accepted in the resort areas. Nevertheless, you will find the purchase prices are high. Cost segregation can be a help, especially with the bonuses available, but you want to make sure the numbers are right. Since land values tend to be higher in the resort areas, that can have a negative effect on tax benefits. A lot of my clients ask for no-cost estimates before they make a purchase to help with the decision-making process.

@Xavier Leal Whenever you purchase property, be sure to get a good no-cost cost segregation estimate. This can help you increase your tax benefits and increase your cash-flow for rehabs or additional purchases. Have you done a study on the property you own in the north end of the Denver Metro area? That property could give you some extra capital to help with the crazy interest rates right now for a new purchase. As you begin your investment journey, tax strategy becomes more and more important. Getting estimates before you make that final purchase can give you a great idea about how much you can expect in benefits on a specific property. Let me know if I can help or answer any questions...I am in the Denver Metro area as well. 

@Cliff Benner  It is a small world. I am from Ohio and owned rental property there many years ago. I am now in Lakewood, CO. There seems to be some land and larger parcels available off 285 going west. The cost of land closer to Denver has skyrocketed in the last few years.

My focus is on tax benefits and extra cash flow that results from purchasing or constructing the real estate structures, commercial or residential (residential rentals) in all 50 states.

Welcome to BP. There is a wealth of information available here and connections from across the country to tap into. 

@Don Bible The best thing you can do is get a no-cost segregation estimate on the particular property you have purchased or are going to purchase. There are too many variables that can change what you can expect from a cost segregation study. No two properties are alike, the variables are huge. The answers to a simple list of questions and a bit of research on the part of the cost segregation company can get you a very close estimate in a couple days.

@Brian Kragerud mentioned above that some states don't allow you to take bonus depreciation. That is true but you should not be concerned about that. Get the estimate which is usually based on the your Federal Tax Rate. That is usually convincing enough to make a good decision about whether you go forward or not. If your state allows bonus on state taxes, that is just an extra bonus. 

Did you know that the losses created by cost segregation can be used against capital gains if you are a Real Estate Professional?