Could real estate be the secret to your success as an entrepreneur? This week’s guest thinks so. His company has saved his clients over $2B total through tax incentives. Joining the show is CEO of CORE Solutions Group, Terry Judge!
Terry sits down with Wes to dive into the world of cost segregation. Terry outlines what cost segregation is, how you can utilize it, and how you can apply it to previous real estate purchases.
Takeaways:
- Everyone needs a mentor. Whether it’s a formal mentor, or simply a more senior employee you shadow, having someone to show you the ropes is crucial for career success.
- Cost segregation is an aspect of the tax code that allows real estate investors to write off their property within 1 - 5 years. When someone buys a building, they can end up writing off almost 30%-40% of the purchase price in year one.
- To implement cost segregation, it’s important to work with a CPA who is familiar with it. Staying compliant is important, and working with a firm that knows the ins and outs of the tax code is crucial to success.
- When utilizing cost segregation, you need to understand what aspects of a property can and can’t be depreciated. While many aspects of the building itself can be depreciated, aspects like the land it is on cannot.
- The amount of your income that comes from real estate determines how much you can depreciate against. Real estate professionals can depreciate against most if not all of their income, while people who charge rent may only against rental income.
- If you previously bought a property, but are only just learning about cost segregation, don’t worry! Through a one time automatic consent with the IRS, you can go back and redo your depreciation, carrying it forward to the current year.
Quote of the Show:
- “If you're going to succeed in any endeavor, why not seek out somebody that's already doing what you want to achieve and just mimic and copy.” - Terry Judge
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