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How Can Cost Segregation Lower Your Taxes?

Audio version available here:

Length: approx. 1 min. 30 sec.

If you own rental or commercial property, claiming depreciation on your tax return can yield significant tax savings. But most depreciation scenarios are implemented over the course of decades, with a limited amount of money deductible on your tax return every year. A way to work around this is cost segregation. Cost segregation can be a great method for property owners looking to deduct their property’s value now rather than over a long period of time.

Cost segregation allows you to depreciate separate assets of your real property (excluding the land since it is not depreciable) over different lengths of time, enabling you to depreciate certain assets over a period of a couple years versus thirty. A shorter depreciation period means a higher tax deduction now. By performing a cost segregation analysis, you can determine which assets of your property are eligible for bonus depreciation.

The rate of bonus depreciation is currently determined by the Tax Cuts and Jobs Act of 2017, which has 2024’s rate at 60%. While the 100% bonus depreciation rate enjoyed in 2022 has steadily phased out, the 2024 rate of 60% can be enhanced with Section 179 expensing, assuming that your property meets the qualifications for Section 179 expensing. For further details on how this can be done, watch our YouTube video explaining this strategy.

Determining how much you would benefit by combining these strategies is most accurately done with professionals by your side. If you are interested in implementing cost segregation into your tax plan, the XQ CPA team would love to help you. Reach out to our tax experts for personalized guidance on how you can use this strategy to lower your taxes by thousands of dollars. Give us a call or make an appointment at the link below.

For more details, watch our YouTube video on Cost Segregation!

Phone: 832-295-3353

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Want to pay less taxes? Read XQ CPA's official tax planning guidebook! How to Grow Your Wealth Through Tax Planning.

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