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Are you stuck with like
a 50, maybe $70,000
tax bill this year?
If you're a higher net
worth individual, maybe
a doctor or lawyer, the power
of doing a cost segregation
analysis for real estate can
totally keep more of that money
in your own pocket and
out of Uncle Sam's pocket.
I'm here with Josh, from
our team, who is really
our cost segregation expert.
When it comes to
new construction,
Josh, this is a powerful
tool for those people who
might be a dentist, might be
a doctor, might be a lawyer--
anyone who has a lot of cash
flow from their business
from their income.
Having to be able to offset
that with cost segregation
is a really powerful
tool, right?
Absolutely.
Absolutely.
One of the biggest challenges
for our high net worth clients
is finding a good tax
write off, where they're
able to get a lot of
bang for their buck
and still get something
with what they're
spending to get that write off.
What's incredible about the
cost segregation bonus on new
construction and newer
construction properties--
and it's obviously best when
you're dealing with a new
construction property because
you get the full benefit
of the full five year and 15
year depreciation bonus in that
first year--
is you're getting
that in addition
to regular depreciation.
So it's offsetting your
taxes tremendously.
We have clients who
are investing $90,000
that they would have had to
pay over $30,000 in taxes
on the government.
But they're getting
a $68,000 write off
with that 90,000 investment.
So instead of 33,000
for the government,
they're only paying 8,000.
They're getting this property.
They're getting that bonus
depreciation in addition
to getting a new
construction cash flow
property, that gives them
standard depreciation on top
of that.
So it's a win-win-win
all around.
So we have a lot of really
smart clients that we work with.
And they might have gone to
school for 13 years or more,
but they never knew the
power of cost segregation.
They don't understand this
incredible tax saving vehicle.
Do you find that
it really-- jaws
are kind of hitting the floor
once you start explaining
to them how they can keep
more of their own money
in their pocket?
Oh absolutely.
And it's so much fun to be in
a conversation with somebody
and oh, Yeah, I
know depreciation.
Yeah, I get that I get
that little write off
each year, which is great and
helps offset my cash flow,
and get to write
off the expenses.
Well, in addition to that,
most people don't even
know this exists, and that it's
a complete bonus in addition
to the depreciation
we're all used to--
the standard 27
and a half years.
So Yeah, jaws have hit
the floor many a times
with explaining this.
And we have clients
who buy every year,
because every year their
business makes a great income.
They need a tax
savings for that year.
And there's really no limit
to the amount of tax savings
you can get.
So however much
you have to invest
in the properties is
how much tax savings
you're going to get.
I mean, that's a great point.
Every year-- this is why, their
old adage in real estate--
buy until you die.
So again, if you run a
successful dental practice,
or law firm, or small
business and you
get that cash flow every year--
to be able to have that cost
segregation study that's
built in every year
that you can write off,
keeps more of your own
money in your pocket,
where you're able
to invest and get
that cash flow from a tangible
asset, like real estate.
Absolutely.
Absolutely.
Real estate is great.
We love it.
We love all the benefits of
cash flow appreciation, equity,
and tax savings.
And now in addition to this,
you get a huge tax write off
to offset your tax liability in
any year you have a great year,
even if you're a consistent high
earner, like our doctors who
make 3, 400,000 a year.
They're in high
income tax brackets.
They're either paying
37% plus on that money,
giving it to Uncle Sam--
or they're buying a house like
this and reducing their tax
burden 60 to $0.70
on the dollar plus.
So let's talk about if you're
new to cost segregation.
You don't understand
what this is.
You're like, what in the world
are Clayton and Josh even
talking about?
A cost segregation engineer
is a certified CPA.
They will fly in ahead of time--
so our team will fly them in.
We'll do multiple
properties at one time.
And they're going to
go through the property
and they're going to
depreciate certain items
in the house in a way that
you wouldn't otherwise do it.
So talk about, in this
kitchen, for instance, what
would they be coming in
and looking at if they're
a cost segregation engineer?
So a cost segregation
engineer is
going to be looking at
the plumbing system.
They're going to be
looking at the appliances.
They're going to be looking at
the electrical system, as well.
And that's all going to
categorize under your five year
depreciation, where
you're looking
at depreciating that over five
years as a bonus immediately.
All right.
If you're watching
right now, I want
to give you some
tangible numbers--
some real numbers that you
can sink your teeth into.
So Josh, give us an
example of a client who
was going to be hit
with a massive tax bill,
but we were able to help them
with this cost segregation
study.
Absolutely.
So one of my clients
in California--
a very high tax
state as you know--
sold her business.
And she sold her business,
and she's planning
to retire with those funds.
She was able to invest in
a place she wanted to live.
And then she realized
the tax burden is
going to be ridiculous for her.
It's going to be about
50% tax on her profit
from selling the
business in California.
So her being able to
invest in one of the cost
side properties we had--
the initial investment--
the down payment for her
was $90,000.
The write off was $72,000.
So she was able to
save $36,000 in taxes
just for doing one of
our cost side properties.
That's amazing.
Did she even know that
this existed before we
started talking to her?
No.
She had no idea-- no clue.
She was just
searching, desperately
trying to find ways to
save money on her taxes,
when she realized
the huge burden she
had gotten from selling
her business in that year.
This is amazing.
And this is a
reminder, everyone,
that the tax code is
written for entrepreneurs.
It's written for
business owners.
So the tax code
in this country is
incentivizing us to build
properties, provide housing.
We have-- we need 25
million affordable houses
in this country right
now that we don't have.
So the government is
incentivizing you to do this.
And a cost segregation study
is an incentive for you
to keep more of your own money.
You're investing in property
that's providing housing.
That's how this works.
Right?
Absolutely.
Absolutely.
OK.
That's an awesome
example of someone
who sold their business.
Give me another example.
Do you have someone
else who maybe
didn't sell their business?
No.
Someone who is in a successful
medical device sales business
makes over a million
in revenue, and is
paying a tremendous
amount to the government.
So it's one of
those things-- when
you make that much money, you're
in the highest income bracket.
You're paying 37 plus
percent on your taxes.
And he needed a way to
effectively save money.
Always liked real estate.
Owned some real estate.
Got the benefits of it.
And with us being able to
have this cost segregation,
it was a huge additional
write off to him.
He was able to invest in
10 properties with us.
And he was able to save
over 200,000 on his taxes--
Wow.
Just from utilizing
this study, because one
of the great things
about this write off is,
it's per property.
So whether you buy one property
or 10 properties or even 15
properties, you're going
to get that deduction
for each property.
And you're able to
utilize that in the year
you buy those properties.
Wonderful.
Wonderful.
So thanks to Josh for
explaining cost segregation.
If you are an
individual who is going
to be turning over a lot of your
money to Uncle Sam for taxes--
37% or less-- investing in new
construction rental property,
where you can keep
more of your own money,
and you get a cash flow
and tangible asset,
is the absolute way to go.
Any final thoughts for our
viewers today on this point?
Well, it's just something
you need to explore.
It's the difference between
you keeping more of your money
in an asset you own or giving
more of it to Uncle Sam.
And the obvious is the first,
because the latter is no fun
and we've all been there.
And it's much better to own
something and understand
that this benefit is an
incredible advantage--
a loophole if you
will-- in the tax law
that we can take advantage of.
And I should say, with our
new construction properties,
we've built a cost segregation
analysis into your closing.
So you're not having
to wait months on this.
We hand these paper-- these
pieces of paperwork to you
at closing, so then you
can accelerate immediately
upon closing, right?
Absolutely.
So one of the benefits of
our full service service
is hiring the cost
segregation engineer,
getting that done before
the property is done,
so you know what
the write off is.
We have that report
done for you.
This is a process that
takes two to three months,
and can cost 5 to
$7,000, depending
on the size of the property.
And since we're
building these projects
and doing them in bulk, we're
able to reduce that cost
and have it built in as
a benefit to investing
in one of our properties.
Wonderful.
Wonderful.
So go ahead book a call
with our team right now.
We'll jump on the
phone with you,
and walk you through the
benefits of cost segregation
analysis, so you can
accelerate that depreciation,
get those tax benefits of
new construction real estate.
Book a call.
And the link is below.
