Hi,
A $1.5M rental can produce $300,000 to $450,000 of first-year deductions instead of about $55,000. In actual tax, that’s $100,000 to $150,000 you keep this year instead of waiting 27.5 years to collect it.
A cost segregation study makes a real difference. Most owners depreciate the whole building over 27.5 or 39 years because that’s the default and nobody ever separated it into pieces. A study does that separation – HVAC, flooring, fixtures, electrical, landscaping – reclassifying personal property under IRC Β§ 1245 and land improvements under Β§ 1250, and moving those components onto 5, 7, and 15 year schedules.
What makes it work right now is that 100% bonus depreciation is permanent again for property acquired after January 19, 2025. Everything a study pulls into short-life property gets deducted immediately rather than over decades. On a $3M commercial property, that’s often $600,000 to $1,050,000 in year one.
Already owned the property for years? You haven’t lost anything. A look-back study captures every missed year as a single catch-up adjustment on your next return – no amended returns needed. Clients regularly find six figures they didn’t know were sitting there.
This works for:
- Single family and multifamily rentals
- Short-term rentals and Airbnbs
- Offices, warehouses, retail, hotels
- Any recently purchased, built, or renovated property
- Land improvements – parking lots, fencing, landscaping, site utilities – the most commonly missed category of all
One thing to know before you commit. The acquisition date is tested by binding contract, not closing, so property under contract before January 20, 2025 generally doesn’t qualify for 100% bonus.
A bigger catch is that a study only turns into money if the rest of your return can absorb the deduction. Generate a $700,000 loss with no way to use it and it sits suspended, doing nothing. That’s the part study-only firms sell you and leave you to figure out.
We handle both the study as well as the actual comprehensive tax strategy:
- Cost segregation studies coordinated with your return, not done separately in a vacuum
- Look-back studies and Form 3115 for property you already own
- Passive activity and real estate professional status planning so the deduction lands against income actually being taxed
- Bookkeeping by property and by entity, with a dedicated bookkeeper
- We are happy to perform a 1245X study that can eliminate recapture entirely!
- 1031 exchange and exit planning so Β§ 1245 recapture is modeled before you sell
- Quarterly tax estimates so you know what you owe before April
- Personal and business tax returns handled by the same team
Reply to this email by Friday and we will schedule a free 15-minute Meet & Greet call with our senior tax advisor. We will look at your situation and tell you exactly what you are leaving on the table.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com