Cost Segregation for Rental Properties - ELB Consulting

Reduce taxes and greatly increase cash flow

How you can benefit from cost segregation

We hear so often from investors with a drive to build a rental home portfolio as part of their exit plan from corporate America, or the foundation for a retirement nest egg, or the beginnings of a real estate empire that will grow into bigger properties and perhaps even syndication.

Real estate has been a wealth builder for many generations. Owning rental real estate has helped so many build wealth and an income stream to retire comfortably. With income, of course, comes taxation – so the goal is to do whatever you can within the confines of tax law to pay only what you owe, and not anymore. Here is where cost segregation can play a big role in that.

Of course, everyone’s tax situation and structure are a little different, in the simplest terms it boils down to whether this rental income has created a tax liability or not. If it has, then cost segregation can greatly reduce or eliminate that tax liability, freeing up more cash to invest in your current properties or to invest in more properties.

“As a practical matter, cost segregation studies should be applied by the taxpayers.”

IRS, U.S. Department of the Treasury

“Cost Segregation is not a tax shelter. It is a specifically defined and guided I.R.S. tax reduction tool. Ninety percent (90%) of all commercial property investors are overpaying their federal income taxes.”

The Journal of Accountancy

Cost Segregation Makes Rental Properties Worth Your Time & Money

The perception of the benefits of cost segregation on single family or like rental properties among many CPAs and property investors is it’s too expensive, or there may not be enough benefit to justify the cost. That’s where having expertise and options for prospective clients makes all the difference. Many of these opinions come from hearsay or perception, and not a knowledge of the facts or alternative solutions, or when it makes sense to evaluate this “interest free loan from the IRS”. And in many cases, the expense of a fully engineered study with an inspection on a single-family rental is too costly. Though there are cost effective alternatives that deliver these sought-after tax deductions.

Rental Properties that Qualify for Cost Seg

Single-family homes

Condos/Coops

Multi-family homes

Luxury homes

Vacation homes

Getaway homes

Rental property vs other commercial properties

So how is cost segregation different for rental properties versus other commercial properties?

Essentially the fundamentals of cost segregation for single family, or 2 to 4-unit properties is no different than any other commercial property type. Having deep knowledge and analytics of the tax law and rules for each particular property type is essential in accurately identifying and maximizing tax benefits.

With this deep understanding, ELB Consulting has developed a modeling platform based on our nearly 20 years of experience and over 14,000 projects in our proprietary database of historical projects. This platform, DIYcostseg.com provides and accurate cost segregation study for single family-duplex-triplex-fourplex rental properties for under $500. The results are available in minutes, and complete audit protection and defense is provided in the unlikely event of an IRS audit.

There are circumstances when our fully engineered, more traditional study may be warranted based on the improvement plan and basis value of the property. This depends on the investors long term strategy.

So, while some on blog posts or other single-family rentals websites may tell you differently, your rental properties can certainly qualify for cost segregation benefits that will reduce tax liability. It really all boils down to circumstances and if it makes sense for your properties and tax situation.

WORKING ON A PROJECT UNDER $1M?

Perhaps you should evaluate the added tax benefits yourself by visiting our DIY tool to better understand the platform and to run an analysis on your property. This tool will allow you to identify the accelerated depreciation benefits available in year 1, versus the 27.5 year straight-line depreciation for year one. You can then consult with your CPA or tax professional whether this added year one and future years depreciation (or the 100% Bonus Depreciation election) will benefit your tax situation.

Learn more about DIY Cost Seg

SERVING ALL 50 STATES FOR OVER 20 YEARS

We've completed cost segregation studies in all 50 states across the USA.

SERVING ALL 50 STATES FOR OVER 20 YEARS

We've completed cost segregation studies in all 50 states across the USA.

Ready to get started?

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Step One: Call or message us.

Call us at (888) 796-2112, submit the inquiry below for a call back, or request a free quote.
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Study of Property

Step Two: We perform a fully-engineered study of your property.

We'll do all the heavy lifting to find you the maximum tax deductions you qualify for.

CPA-READY Report

Step Three: We deliver your 'CPA-ready' report.

Get a completed cost segregation study that decreases your tax liability and puts more money in your pocket.

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