The Nick Huber Show

Ep 159: What is Bonus Depreciation and Why it's Important?

Sep 2, 2024

In this insightful discussion, guest Mitchell, a savvy expert in real estate and tax strategies, navigates the complexities of bonus depreciation. He explains how it can be a game changer for offsetting income and dives into how the IRS defines useful lifespans for property components. Listeners will learn about the distinctions between residential and commercial depreciation, the evolution of bonus depreciation laws, and real-world examples demonstrating how strategic use of this tax benefit can significantly enhance cash flow. A must-listen for real estate investors!

12:53

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Episode guests

Mitchell

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Episode notes

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Quick takeaways

Bonus depreciation allows real estate investors to accelerate capital recovery by deducting costs for components with shorter useful lives, significantly enhancing cash flow.

Understanding the IRS-defined depreciation schedules for residential and commercial properties is crucial for leveraging tax benefits and reducing taxable income in real estate investing.

Deep dives

Valuation Method for Self Storage Facilities

A systematic method for analyzing self-storage facilities is discussed, emphasizing the importance of specific financial metrics. The speaker explains the process of determining a property's value using minimal information, such as a pin and basic metrics. By detailing this approach, the speaker enables listeners to understand how to effectively underwrite their own evaluation of self-storage properties. A free PDF outlining these methods is available for download, making this valuable information accessible for aspiring investors.

Intro

2min

Understanding Depreciation in Real Estate Investments

4min

Understanding Accelerated Depreciation and its Impact on Real Estate

2min

Maximizing Tax Benefits Through Bonus Depreciation

4min

In this clip, Mitchell and I explain how bonus depreciation works for real estate. We talk about the IRS defines useful lifespans for various components for both residential and commercial real estate. We then explain the concept of bonus depreciation and how you can use that to offset other income.

Thanks for listening!

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