Save Big Money with Cost Segregation, with Yonah Weiss | Real Estate to Freedom Podcast #3

When you have a property that is $500k in value or more and there is taxable income on the property, tax segregation can potentially save you tens of thousands of dollars on your tax return, putting more money in your pocket and the pockets of your investors.

Listen in and get a free analysis with Yonah today!

Contact Yonah here: www.yonahweiss.com

Transcripts (automated) Well, maybe you can tell the listeners a little bit about your background and how you got mixed up and the real estate game and especially as it relates to what you're doing with Madison Specs.

Absolutely. So I got how a teaching background and I spent many years studying and teaching host university, Post College, postgraduate and then a few years ago a friend of mine was working at a commercial mortgage financing from a family office for his uncle. And he asked me to, you know, if I was looking for something to do, kind of get involved and learn about real estates and I decided to take him up on the offer and just got my feet wet, jumped in, started reading about everything related to real estate. And it was totally fascinated and to just learn more. So it started out in commercial mortgages and financing and then kind of move very quickly into real estate. Residential real estate's when I got my broker's license in order to just really just to learn more and apprentice someone who was a, had been in the field for a number of years successfully.

Which I did. And then I got into, you know, doing some, seeking out how we can, you know, make money investing in real estate and partner with someone doing some single-family fix and flips. Which got me real firsthand involvement and most recently and just involved in everything that I've been doing and was hired by an amazing commercial real estate firm based out of Lakewood, New Jersey national firm. They're a title company and title agency and they have a number of other services related to real estate and cost segregation happens to be one of them. They are one of the leaders, Madison Specs, which is the branch of Madison commercial real estate, Madison title. Most people in the New York, New Jersey area have heard of them and use them. You know, Dallas, Texas is our second largest office out there and they're huge in that space. So I've been involved in the cost segregation team for about the last year, which we're going to delve into and learn about how this tax benefit helps property owners to save money on their taxes, which is exactly what we do.

Yes. Excellent. Excellent. So, now what are some of the benefits of cost segregation? Then we can go into a little bit of. Some of the benefits are increased cash flow. No, deferred taxes is always a great way to increase your cash flow. It's getting a handle of your portfolio, whether you own one property or several properties. It's a tax strategy to just allow you to use your money instead of giving it the irs to further increase your investment portfolio.

Yes. Yeah. You. What's amazing about this strategy is that there are still so many people that don't know what this is. Many multifamily guys that I've spoken to, I mentioned this to them and this had cost said what's that? Mainly because people start off in this single family home business to small multifamily and it doesn't really apply to the smaller type of a property as well, but I'll let you talk to talk to that, but maybe you could walk us through like a technical discussion around how does it work, like what is involved with all this.

So conservation is for a larger, you know, just to give the general background, it's an engineering-based study, surveyed detailed survey of the property which allows you to allocate all of the assets inside and outside of the property into different categories and different depreciation lives. So each property has a depreciation life, which the IRS kind of arbitrarily gave a number too. So we will talk about that right now, which is a residential property, whether it be single family or multifamily, has a depreciation life of 27 and a half years. Any commercial property, anything beyond that, whether it be, you know, office space, industrial hospitals, health facilities, hotels, even retail, you name it, it's shopping malls. All of that falls into commercial space where people don't actually live for a long period of time. That depreciates over 39 years. So the, in the traditional sense of its appreciation, which is a tax write off, which is a category on your tax returns that allows you to make a deduction based on the value of your property when you bought it. And constantly vision allows you to accelerate that. The appreciation. So by breaking up Lincoln said, breaking up the property into faster depreciation lives, which we'll go into more detail how they're worth. It allows you to take huge amounts of depreciation in the early years of property ownership...