1. What is Cost Segregation?
Cost Segregation is a highly advantageous and widely embraced tax tactic utilized by owners of commercial and residential rental properties to expedite depreciation deductions, defer taxes, and enhance cash flow.
When you purchase real estate, you need to split the purchase price between the building and the land. A cost segregation analysis helps you determine the proper allocation of your investment.
Oftentimes, these studies accelerate depreciation schedules for your assets, particularly with real estate, and produce significant tax savings.
2. What are the Benefits of doing a Cost Segregation Study with SET?
Many business owners are often surprised by the significant tax savings uncovered through a cost segregation study. Some of the key benefits of choosing SET to do it include:
3. Should Airbnb Hosts Use Cost Segregation for Short-Term Rentals?
Completing a cost segregation study for your Airbnb offers numerous benefits. You’ll be able to claim higher depreciation expenses during the initial years of your venture, providing a clearer understanding of your property’s value.
However, there are also drawbacks to consider, such as increased recapture amounts upon eventual sale of your investment. It’s essential to weigh these pros and cons, taking into account your long-term plans for the property.
If you’re uncertain about asset allocation, seeking guidance from a tax professional is advisable.
4. How do I get started?
The initial step is to assess your investment property to confirm its eligibility for the process. With decades of collective experience assisting short-term rental owners and Airbnb hosts, the experts at Shared Economy Tax can provide invaluable assistance. We offer guidance on cost segregation and other intricate tax matters. Schedule a session with a tax professional.
