Cost Segregation 101
Understanding one of the most powerful tax tools for real estate investors.
Including Bonus Depreciation
Our company has helped investors save over $4bn (hook)
I've been a guest on over 400 podcasts explaining this as simply as possible.
🧵
The Scariest of all Taxes...Recapture Tax
You know about the great tax benefits for real estate investors, especially depreciation--“king of all deductions”
In case you think Uncle Sam is your friend...it’s important to remember the dark side of depreciation...recapture tax
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Just saw the first 'distressed seller' LP opportunity come across my inbox from a client of mine and great operator in PHX, buying a multifamily property
35% discount of what it was bought for in 2021🤯
It's happening. I hope you're on the right side
Have you seen any yet?
This video is from a few years ago, but gives the best perspective I could find for anyone wondering about the horrific situation in Israel.
Mosab Hassan Yousef author of Son of Hamas (the best book I've read on the truth of the conflict), tells it like it is.
Hamas terrorists
Multifamily is an awesome asset class that gets a lot of attention, rightfully so, for Cost Segregation 📦
How much tax benefit is there anyway?!
I'm going to give a short case study and show the breakdown of costs that are segregated.
🧵
Probably one of the best commercials of all time.
There couldn't possibly be a better way of selling Mobile Homes
@mhprvpmvp
looks like you have to up your game with a video, show it like it really is
ChatGPT is going to ruin social engagement
I just did a webinar about cost seg and someone asked a great question in the chat
Before I could answer someone else responded what looked like an articulate answer. Only it was WRONG.
Another question. This guy chimes in again to
Only healthy fighting age men in this bombing of the Indonesian Hospital/terror center, north Gaza Strip. The footage was broadcast live on Aljazeera but was removed after Saudi Twitter accounts noticed that some of the men were even in uniform!
#Hamaslies
#HamasMonsters
Just got off the phone with a client, reviewing his cost seg report
He said his CPA told him this is some kind of scam 🤷♂️
In other news, my client is looking for a new CPA 😂
Gas Stations are depreciated over 15 years, and not 39 years like almost all other commercial properties
That means the entire property can qualify for Bonus Depreciation - in 2023 it's 80%
If any one of the following three criteria are met:
FYI:
You CAN'T *use* the benefits for cost seg and bonus depreciation by investing passively as an LP (limited partner) with a RE sponsor to offset your W2 income, UNLESS you or your spouse are "real estate professionals"
Those MILLIONS will just be unusable passive losses
Who's that good looking bearded guy with the ping pong paddle in the back?
If I was writing the article, the headline would have read:
Eli Lever falls short with his $100M bid for the Flatiron Building - Will get the next one.
The proposed bill with the return of 100% Bonus Depreciation just hit the House floor, and is being debated as we speak.
H.R. 7024 Tax Relief for American Families and Workers Act of 2024
Should I do a mega 🧵on Renovations as related to cost segregation?
When should you do a cost seg, before, after, or both?
Comment below, and if I get a good response, I'll tag you if I end up writing it
What other cost seg related subjects should I do a thread on next?
On the floor for today's vote in the House:
Returning Bonus Depreciation to 100% for property placed in service in 2022 thru 2025
H.R. 7024
Tax Relief for American Families and Workers Act of 2024
Stay tuned.
Just got off the phone with a client, reviewing his cost seg report.
He said his CPA told him this is some kind of scam 🤷♂️
In other news, my client is looking for a new CPA 😂
$407,373 tax deduction in 2022 🤯
A LOT of STR owners are getting it done to offset W2 income
100% Bonus Depreciation, using a Cost Seg study on a STR is a game changer.
Without cost seg, the SL depreciation deduction would have been $27,787/yr
How?🧵👇
Yesterday was the first time in 5 years that I have come back from a week long vacation NOT overwhelmed by emails
I used to have 300-400 unread emails to respond to
Recently I brought on 2 assistants who handle all my emails
Game-changer. After their filtering, I had 15 emails
I couldn't be in NYC and not get to see the one and only
@BobKnakal
and the iconic
#maproom
I wanted to get a chance to finally meet in person after many interactions and joining me on the Weiss Advice podcast.
Bob, I told you this in person, but everyone needs to know, if they
Bonus Depreciation is going away? 😱
A question I've been getting a lot recently, so allow me to clarify publicly, with a bit of context for those of you who don't know what bonus depreciation is.
First, let's set the record straight. Bonus depreciation is NOT going away. 😄
What would you do with an extra $100k today?
Spoke with a good friend this morning who started a business helping people get 0% business lines of credit for 12-18 months
To be used for whatever you want
Fascinating that I never knew products like this exist at most banks
Unpopular Opinion:
(and what got me blocked by
@recostseg
and it's Sweaty co-owner)
You CAN'T use the benefits of cost seg and bonus depreciation by investing passively as an LP (limited partner) to offset your W2 income
UNLESS you or spouse are REPS (& a few other exceptions)
@Co11egeLandlord
This is actually how the airbnb algorithm views the stars, unlike how our logic views them.
If you have under 4.8 overall rating on airbnb, your listings get shown much less.
The first words we say when we open our eyes every morning are
"I thank you, living and eternal King, for You have returned my soul within me with compassion–great is Your faithfulness!"
It's a Jewish prayer, but anyone can say it
Gratitude is the the foundation of everything
I invested $100k as an LP in a multifamily RE syndication this year
It paid over $6k in distributions this year, and increase next year, and projected to make 2x on sale in year 4-5
Active income —> Passive income💯
But how does one get excited about 2%?
What am I missing?
This might be an unpopular opinion, but "value-add" does not mean upgrading the appliances and and countertops to charge more rent.
That's one small part.
It's increasing NOI by reducing operational inefficiencies, and increasing revenue besides just rent.
Rise48 bought more multifamily than Blackstone in 2022 - $860M
They were
#3
in acquisitions over the past 5 years $1.95bn
I just hosted Zach Haptonstall, CEO and co-founder of Rise48 Equity on my weekly zoom meetup. He shared how they were able to scale so quickly and
The best book on public speaking I ever read (and re-read all the time) is Steal the Show by Michael Port
I gained tremendous insight, not only about public speaking, but also
-daily interactions
-sales calls
-meetings
-job interviews
-and even using social media
My assistant says she gets a better response when sending emails from my account with my name as vs. from her email on my behalf
Cracked me up today. she sent an email from me to a client cc'ing herself: "My assistant cc'd will reach out shortly"
She replied "Thanks Yonah!"😂
Sam Zell, who had an incredible career amassing wealth through real estate since the early 1960s, passed away today.
BDE - He will be missed, but his influence will carry on.
This
@TimFerrissShow
episode was my all time favorite.
To my 5k new followers Quick Intro
-Father of 6
-Teacher for 15 yrs
-RE Investor for 7 yrs (mostly LP)
-Cost Segregation Expert
-Helped clients save over $1B in taxes
#CostSegKing
-Top Podcast guest on over 450 podcasts
-Host of
#WeissAdvice
Podcast
-Capital Raiser
Say Hello
Fill in the blanks:
My degree is in____________________
And now I work in_________________
Kinda funny thinking about how how having a history degree, has helped in becoming a Cost Segregation Expert, and RE Investor...or has it?
re-Intro for new followers
-Teacher for 15 yrs
-RE Investor for 7 years (mostly LP)
-Cost Seg Expert -Helped clients save over $1B in taxes
#CostSegKing
-Top Podcast guest -featured on 400+ podcasts
-Host of
#WeissAdvice
Podcast
-Capital Raiser
Say Hello
Land value plays a big role in real estate
When buying a property, the purchase price is split between land value and building (or improvements) value
The building 'depreciates', & you can deduct it from your taxes
Land doesn't depreciate
How do you know the value of land?
🧵
Storytime:
Did you know the IRS can send their own Cost Seg firm to audit your cost seg study if they think you are claiming way too much?
Just had this happen to a former client of ours.
He bought an industrial property for ~$30mm.
We did the initial feasibility, and it
The % of Bonus Depreciation your property is eligible for is based on the year it was placed into service--not the current tax year
If you placed a property into service 2018-2022 = 100% Bonus Dep.
If you place a property in service in 2023, it's eligible for 80% Bonus Dep
Qs?
What was your first passive investment?
Mine was an LP into a self-storage development. Solid sponsor (20 year track record)
Was supposed to be a 5 year hold
They ended up flipping the land after entitlement returning 152% Return in 15 months
That hooked me in
It's amazing what 8 months of being active on
#retwit
can do
Honored to recognized among so many leaders in this space that I look up to
I can't tag the other 174 people who made the 2023 CREi Twitter Influencer List
Thank you
@kenashley
&
@MrsSarahMalcolm
Self Storage is an awesome asset class that often gets overlooked for Cost Segregation 📦
How much tax benefit is there anyway?!
I'm going to give a short case study and show the breakdown of costs that are segregated.
🧵
"You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you."
-Dale Carnegie
A few months ago I stumbled upon
#Retwit
, an amazing community on Twitter of real estate professionals from all backgrounds and aspects of the industry.
Having gone all in on Linkedin content creation & community building, driving 8 figures of revenue to our Cost Seg business
This really rubbed me the wrong way.
I’m sharing here instead of calling out the offender.
As you may know, I’ve guested on over 400 podcasts in the real estate world, to share my expert knowledge of
#CostSegregation
I really enjoy it, and rarely turn down an opportunity for
Client on phone call just now:
"My CPA thinks doing a cost seg is risky, & will open me up to an audit"
IRS: Cost Seg is the proper way to depreciate property
Me:🤦♂️
Don't assume your CPA knows all of the ins & outs of RE investing, do yourself a favor and educate yourself
This is so sad
Someone looked up to for financial success, has no idea what success actually is
I have asked 300+ of the most successful people I know on
#WeissAdvice
Podcast "What does success mean to you?"
NONE of them said anything remotely close to this guy
What say you?
You may lose your wife, you may lose your dog, your mother may hate you. None of those things matter. What matters is that you achieve success and become free. Then you can do whatever you like.
Perseverance.
"The righteous man falls down seven times and gets up."
–Proverbs, 24:16
Greatness is defined by King Solomon, as getting up one more time than you've fallen down
Try to succeed, get up from failure, and keep moving forward
•Michael Jordan puts out a new shoe, people buy it
•Apple releases a new phone and people stand in line for it
•Beyoncé concert - spend $350 on a ticket
Friend or family member starts a new business, people are wary of buying it!
"Gotta research it!" "Too expensive!"
As someone who only started being active on
#retwit
less than 5 months ago, I'm honored to be recognized by
@kenashley
among dozens of other amazing people to make the "LIST"
I love the abundance mentality that I see here daily.
Check out the full list
Here's a great way to NOT get invited as a guest on a podcast
-1st message you send is a cold one
-Don't add value--just ask
-Don't engage with any of my posts beforehand
-Don't tell me a compelling reason to invite you as a guest
Don't be this guy. Do the opposite
End Rant😁
Winners are just losers who never give up
Losers look for success at the finish line. Winners experience success along the way
Keep trying
Bet on yourself, you deserve it!
Never bad mouth your competitors
Never bad mouth anyone for that matter
I got a call recently from someone who saw an article I wrote about Cost Segregation on
@BiggerPockets
He told me outright that he got quotes from two other firms, but he wanted another quote
(cont')
When does it NOT make sense to do a cost seg?
-You plan to sell in less than 2 years
-Purchase price is under $200k
-You plan a gut renovation before placing it in service
-You can't actually USE the deductions (like if you're a W2 and not REPS)
Everyone else--reach out 😎
@garyvee
👉 The key to being a strong entrepreneur or executive is to understand that patience is extremely important
Sometimes people complain that their right hook didn’t land, and I find out that they were only jabbing for three months
In the entire span of your career...
If you're not posting and engaging on Twitter, you're missing out connecting with so many people
You're scared. What will people think?
Fear is the biggest thing keeping you from achieving what you want
But you must overcome that, and jump in
Apply this lesson to everything
Why do so many people wait until the last minute, and then expect everyone else to rush to get things done?
Me: It takes us 6-8 weeks to complete a cost seg study
Client: But I want to send my K-1s out next week😲
Me: Maybe you should have thought about that before today
Retwit - I need to ask you a favor 😊
I've been selected as a finalist for Best Cost Segregation Expert for the
@AAOA
American Apartment Owners Association.
Here's what I need from you:
1) Like this post/or retweet 👍
2) Tag two people who think Bonus Depreciation is cool 😎
I literally LOL on a call just now
A client asked me, what happens, now that bonus depreciation is going away, does that mean I'm out of a job? He said if I'm looking for work I can join his RE company😂
I was flattered, but cost seg is here to stay and so is the
#costsegking
A great meal and even better conversation.
Amazing to finally meet
@chernobelskiy
in person.
I couldn't come to Phoenix and not spend some time with this guy.
Just got off the phone with a client, reviewing his cost seg report.
He said his CPA told him this is some kind of scam 🤷♂️
In other news, my client is looking for a new CPA 😂
Does this mean I'm officially part of
#retwit
?
How does this work?
Anyways thanks for the follow
@moseskagan
🙌
Honored. I guess that means you forgive me for those cold calls 4-5 years ago 🤣
And
@ChrisRamsey60
too!
Random question:
Are you supposed to follow everyone that follows you?
I still don't know the proper etiquette of this app...
What's your standard procedure?
@sweatystartup
@recostseg
Do you also tell them that they can't actually use those deductions against their active income unless they are a full time real estate professional?
#retwit
Twitter is an amazing place.
I started posting actively Dec 1st, and the next thing I know, I'm flying in to join 100 other incredible RE folks, all led by this anon account
@realEstateTrent
!
When you follow your intuition, good things happen
Four months ago, I had a crazy idea:
Reveal my identity to 100 members of this community by hosting an open bar event in NYC.
Just Real Estate Talk.
Budget: $35K. I cover the cost.
Then, crazy things started happening:
A tale of two platforms:
Yesterday I posted farewell 100% Bonus Depreciation with a GIF on Twitter and Linkedin (where I have 23k followers)
Linkedin:
likes 238
shares 2
comments 40
views 19k
Twitter:
likes 95
retweets 13
comments 7
views 19k
Twitter has great organic reach!