246. How to (Legally) Stop Paying Taxes with Commercial Real Estate | Yonah Weiss

Key Takeaways:

Cost segregation is an advanced depreciation strategy that allows you to depreciate certain components of a commercial property (like flooring, cabinets, appliances) over a shorter 5-7 year period instead of the standard 27.5 or 39 year period. This can provide significant tax savings.

Cost segregation studies are recommended for properties over $200,000, as the upfront cost of the study is usually worth the tax benefits. Even a $480,000 property can see $120,000 in year one depreciation deductions.

The potential downsides of cost segregation include not being able to use the tax benefits if you don't have enough tax liability, and potential recapture taxes when the property is sold.

Some of the best assets to maximize depreciation benefits are mobile home parks, RV parks, and golf courses, which can allocate 70-80% of the purchase price to 15-year land improvements that qualify for bonus depreciation.

When investing in syndicated deals, key factors to consider are the experience and integrity of the sponsor, the cash flow, and the ability to utilize the tax benefits from cost segregation and depreciation.