WEBVTT - Real Estate Tax Benefits: What is Cost Segregation

0:00:01.240 --> 0:00:01.600
<v Speaker 1>Earners.

0:00:01.639 --> 0:00:02.000
<v Speaker 2>What's up.

0:00:02.080 --> 0:00:04.560
<v Speaker 3>You ever walk into a small business and everything just

0:00:04.720 --> 0:00:07.880
<v Speaker 3>works like The checkout is fast, the receipts are digital,

0:00:08.400 --> 0:00:11.399
<v Speaker 3>tipping is a breeze, and you're out the door before

0:00:11.400 --> 0:00:15.560
<v Speaker 3>the line even builds. Odds are they're using Square. We

0:00:15.720 --> 0:00:18.280
<v Speaker 3>love supporting businesses that run on Square because it just

0:00:18.280 --> 0:00:21.520
<v Speaker 3>feels seamless. Whether it's a local coffee shop, a vendor

0:00:21.560 --> 0:00:23.840
<v Speaker 3>at a pop up market, or even one of our

0:00:23.880 --> 0:00:27.560
<v Speaker 3>merch partners, Square makes it easy for them to take payments,

0:00:27.760 --> 0:00:31.480
<v Speaker 3>manage inventory, and run their business with confidence, all from

0:00:31.600 --> 0:00:35.000
<v Speaker 3>one simple system. If you're a business owner or even

0:00:35.080 --> 0:00:38.600
<v Speaker 3>just thinking about launching something soon, Square is hands down

0:00:38.640 --> 0:00:41.680
<v Speaker 3>one of the best tools out there to help you start, run,

0:00:41.920 --> 0:00:45.240
<v Speaker 3>and grow. It's not just about payments, it's about giving

0:00:45.240 --> 0:00:47.920
<v Speaker 3>you time back so you can focus on what matters

0:00:47.960 --> 0:00:51.199
<v Speaker 3>most Ready. To see how Square can transform your business,

0:00:51.479 --> 0:00:56.120
<v Speaker 3>visit Square dot com backslash go backslash eyl to learn

0:00:56.160 --> 0:01:01.360
<v Speaker 3>more that Square dot com backslash, go backslash eyl. Don't wait,

0:01:01.640 --> 0:01:04.480
<v Speaker 3>don't hesitate. Let's Square handle the back end so you

0:01:04.480 --> 0:01:10.839
<v Speaker 3>can keep pushing your vision forward. This episode is brought

0:01:10.840 --> 0:01:12.760
<v Speaker 3>to you by P and C Bank, a lot of

0:01:12.760 --> 0:01:16.360
<v Speaker 3>people think podcasts about work are boring, and sure they

0:01:16.440 --> 0:01:20.319
<v Speaker 3>definitely can be, but understanding of professional's routine shows us

0:01:20.319 --> 0:01:24.840
<v Speaker 3>how they achieve their success little by little, day after day.

0:01:24.959 --> 0:01:27.440
<v Speaker 3>It's like banking with P and C Bank. It might

0:01:27.560 --> 0:01:30.440
<v Speaker 3>seem boring to save, plan and make calculated decisions with

0:01:30.480 --> 0:01:33.520
<v Speaker 3>your bank, but keeping your money boring is what helps

0:01:33.520 --> 0:01:36.640
<v Speaker 3>you live or more happily fulfilled life. P and C

0:01:36.760 --> 0:01:41.920
<v Speaker 3>Bank Brilliantly Boring since eighteen sixty five. Brilliantly Boring since

0:01:41.959 --> 0:01:44.640
<v Speaker 3>eighteen sixty five is a service mark of the PNC

0:01:44.720 --> 0:01:48.680
<v Speaker 3>Financial Service Group, Inc. P and C Bank National Association

0:01:48.880 --> 0:01:49.840
<v Speaker 3>Member FDIC.

0:01:51.560 --> 0:01:54.160
<v Speaker 1>Can we just talk about real estate quickly? Because they

0:01:54.240 --> 0:01:56.560
<v Speaker 1>know it's course segregation is a lot of different stuff

0:01:56.600 --> 0:01:58.760
<v Speaker 1>like that. So I know that that's something that people

0:01:58.800 --> 0:02:01.400
<v Speaker 1>might probably want to be inter us absolutely. So what

0:02:01.440 --> 0:02:03.160
<v Speaker 1>I'm going to do here is I'm not sure if

0:02:03.160 --> 0:02:05.280
<v Speaker 1>you guys caught my presentation. I know you guys were

0:02:05.400 --> 0:02:09.480
<v Speaker 1>going you were going crazy during invest Fest, But I

0:02:09.520 --> 0:02:12.000
<v Speaker 1>did a presentation during invest Pest, and I want to

0:02:12.040 --> 0:02:16.360
<v Speaker 1>talk about I want to talk about real estate and

0:02:16.480 --> 0:02:19.920
<v Speaker 1>cost segregation and what it means. And a lot of

0:02:19.960 --> 0:02:23.200
<v Speaker 1>times people are like Listen, I need to make a change.

0:02:23.240 --> 0:02:25.400
<v Speaker 1>I need to do something. I need to invest in

0:02:25.440 --> 0:02:29.959
<v Speaker 1>real estate. But what happens is they may get between

0:02:30.000 --> 0:02:36.640
<v Speaker 1>depreciation expenses and so between depreciation expenses and between the

0:02:36.760 --> 0:02:39.800
<v Speaker 1>deductions of operating the real estate, they may just come

0:02:39.840 --> 0:02:41.760
<v Speaker 1>off of it like being tax free. Right, So you

0:02:41.800 --> 0:02:45.120
<v Speaker 1>may just like be tax free. You can get that

0:02:45.200 --> 0:02:48.520
<v Speaker 1>really real estate income. But a lot of times people

0:02:48.600 --> 0:02:52.200
<v Speaker 1>have business income, Right, you have business income that you're like, listen,

0:02:52.320 --> 0:02:54.880
<v Speaker 1>I need to offset this business income, and I need

0:02:54.919 --> 0:02:57.000
<v Speaker 1>an asset that's going to help me do that.

0:02:57.320 --> 0:03:00.240
<v Speaker 2>So what exactly do I need to do? Right? So

0:03:00.280 --> 0:03:00.840
<v Speaker 2>that's great.

0:03:00.919 --> 0:03:03.239
<v Speaker 1>I was able to you know, utilize, and my say

0:03:03.360 --> 0:03:05.919
<v Speaker 1>all the time real estate is one of those amazing,

0:03:06.120 --> 0:03:07.400
<v Speaker 1>amazing tax.

0:03:07.160 --> 0:03:11.800
<v Speaker 2>Deductions where you can win in real life and lose

0:03:11.840 --> 0:03:12.400
<v Speaker 2>on paper.

0:03:12.520 --> 0:03:15.119
<v Speaker 1>And all that means is that in real life you're

0:03:15.160 --> 0:03:18.600
<v Speaker 1>bringing in money, but on paper because of depreciation, which

0:03:18.600 --> 0:03:21.280
<v Speaker 1>we talked about when we're talking about vehicles, you're able

0:03:21.320 --> 0:03:25.520
<v Speaker 1>to now lose on paper. Right, you're now most likely

0:03:25.760 --> 0:03:27.239
<v Speaker 1>reporting a loss because you're.

0:03:27.080 --> 0:03:28.600
<v Speaker 2>Able to take all those deductions.

0:03:29.040 --> 0:03:33.520
<v Speaker 1>So basically, what we do to take it a step further, right,

0:03:33.560 --> 0:03:35.600
<v Speaker 1>So all of my people that's like, listen, I need

0:03:35.640 --> 0:03:39.800
<v Speaker 1>a higher depreciation expense. So therefore I'm now able to

0:03:40.960 --> 0:03:44.840
<v Speaker 1>you know, go and deduct all of my you know,

0:03:44.880 --> 0:03:48.600
<v Speaker 1>deduct my real estate losses and have it offset my

0:03:48.720 --> 0:03:49.600
<v Speaker 1>business income.

0:03:50.280 --> 0:03:52.280
<v Speaker 2>Right, So how can we do that? So we do

0:03:52.360 --> 0:03:53.680
<v Speaker 2>what's called cost segregation.

0:03:53.800 --> 0:03:57.680
<v Speaker 1>Cost surrogation is pretty much just to study, right, is

0:03:57.720 --> 0:04:01.640
<v Speaker 1>a process that looks at each element of your property.

0:04:01.720 --> 0:04:03.680
<v Speaker 1>It is It is not something that you can go

0:04:03.720 --> 0:04:07.560
<v Speaker 1>off and do by yourself. It is an actual analysis

0:04:07.600 --> 0:04:11.200
<v Speaker 1>that has to be done of your property. And then

0:04:11.240 --> 0:04:13.800
<v Speaker 1>when it comes to the cost surrogation, what happens is

0:04:13.800 --> 0:04:17.120
<v Speaker 1>you can also So we talked earlier about bonus depreciation. Right,

0:04:17.400 --> 0:04:20.920
<v Speaker 1>so bonus appreciation pretty much up until twenty twenty two,

0:04:21.080 --> 0:04:24.400
<v Speaker 1>it was one hundred percent, but then up until I

0:04:24.400 --> 0:04:27.440
<v Speaker 1>mean now it's only sixty percent. But what happens is

0:04:27.440 --> 0:04:31.600
<v Speaker 1>the IRS says, Okay, every single asset has its specific

0:04:31.800 --> 0:04:34.400
<v Speaker 1>asset class, right, like it says, hey, this is a

0:04:34.440 --> 0:04:36.360
<v Speaker 1>building can be written off over twenty seven and a

0:04:36.400 --> 0:04:40.159
<v Speaker 1>half years. Personal property can be written off over five years.

0:04:40.400 --> 0:04:43.159
<v Speaker 1>Land improvements can be written off over fifteen years. But

0:04:43.279 --> 0:04:48.719
<v Speaker 1>how do we utilize bonus appreciation to like magnify or

0:04:48.760 --> 0:04:52.240
<v Speaker 1>give us more of a depreciation expense. What we can

0:04:52.320 --> 0:04:55.279
<v Speaker 1>do is, so in this example, we have a house

0:04:55.320 --> 0:04:58.000
<v Speaker 1>that's five hundred thousand dollars. Keep in mind, guys, you

0:04:58.080 --> 0:05:01.839
<v Speaker 1>cannot take bonus depreciation on a building, and you cannot

0:05:01.880 --> 0:05:03.440
<v Speaker 1>depreciate land.

0:05:03.680 --> 0:05:04.920
<v Speaker 2>Okay, So in.

0:05:04.800 --> 0:05:06.839
<v Speaker 1>This example, you see that the home is five hundred

0:05:06.839 --> 0:05:10.560
<v Speaker 1>thousand dollars, the building is two hundred and fifty thousand dollars.

0:05:10.680 --> 0:05:13.280
<v Speaker 1>You're going to still divide that over twenty seven and

0:05:13.320 --> 0:05:16.200
<v Speaker 1>a half years. You cannot take bonus appreciation on it.

0:05:16.720 --> 0:05:19.480
<v Speaker 1>So the depreciation expense there's going to be nine thousand,

0:05:19.520 --> 0:05:21.280
<v Speaker 1>three hundred and eighty two dollars.

0:05:21.680 --> 0:05:22.240
<v Speaker 2>Then you have.

0:05:22.320 --> 0:05:27.039
<v Speaker 1>Personal property eighty seven thousand. The depreciation you can take

0:05:27.080 --> 0:05:29.880
<v Speaker 1>sixty percent on that, So that's going to be fifty

0:05:29.880 --> 0:05:33.120
<v Speaker 1>two thousand, two hundred dollars depreciation expense that you'll be

0:05:33.120 --> 0:05:35.200
<v Speaker 1>able to take off of the personal property of your

0:05:35.960 --> 0:05:37.680
<v Speaker 1>of your of your home.

0:05:38.120 --> 0:05:38.280
<v Speaker 2>Right.

0:05:38.279 --> 0:05:39.880
<v Speaker 1>And people are like, oh my god, like all of

0:05:39.920 --> 0:05:41.960
<v Speaker 1>the like, how can you break it up like this?

0:05:42.040 --> 0:05:43.680
<v Speaker 1>But you break it up because your house is not

0:05:43.880 --> 0:05:45.760
<v Speaker 1>just a building, right. Your house is made up of

0:05:45.800 --> 0:05:50.360
<v Speaker 1>different things. So let's dissect the property and really maximize

0:05:50.400 --> 0:05:54.159
<v Speaker 1>on this depreciation expense. Then you have land improvements. Land

0:05:54.200 --> 0:05:57.760
<v Speaker 1>improvements so this is like your driveway. So that is

0:05:57.800 --> 0:06:01.839
<v Speaker 1>twenty five thousand dollars depreciation expense. You can take sixty

0:06:01.839 --> 0:06:04.359
<v Speaker 1>percent of its fifteen thousand. That's going to give you

0:06:04.360 --> 0:06:07.559
<v Speaker 1>a total depreciation expense of seventy six thousand, five hundred

0:06:07.600 --> 0:06:08.720
<v Speaker 1>and eighty two dollars.

0:06:09.160 --> 0:06:09.360
<v Speaker 2>Right.

0:06:09.400 --> 0:06:11.919
<v Speaker 1>So, now, if let's just say you did not do

0:06:12.000 --> 0:06:15.359
<v Speaker 1>cost segregation, and you just said, okay, well I have

0:06:15.440 --> 0:06:17.760
<v Speaker 1>my home of five thousand dollars and then I had

0:06:17.920 --> 0:06:20.080
<v Speaker 1>land of one hundred and thirty thousand, I need to

0:06:20.120 --> 0:06:23.839
<v Speaker 1>back that out. You have about a thirteen thirteen thousand, five.

0:06:23.760 --> 0:06:26.400
<v Speaker 2>Hundred dollars expence depreciation expense.

0:06:27.520 --> 0:06:30.279
<v Speaker 1>But when you do cost segregation, now you're able to

0:06:30.279 --> 0:06:33.560
<v Speaker 1>have a depreciation expense of seventy six thousand dollars.

0:06:34.200 --> 0:06:34.400
<v Speaker 2>Right.

0:06:34.400 --> 0:06:36.479
<v Speaker 1>And so now what that does is, let's say for

0:06:36.560 --> 0:06:40.799
<v Speaker 1>my you know, for my people that are let's say

0:06:42.200 --> 0:06:44.000
<v Speaker 1>let's just say you're in real estate, and this is

0:06:44.000 --> 0:06:45.279
<v Speaker 1>what you're you know, you're doing.

0:06:46.240 --> 0:06:47.520
<v Speaker 2>You're doing real estate full time.

0:06:47.520 --> 0:06:49.560
<v Speaker 1>And let's just say you're investing in another business that's

0:06:49.600 --> 0:06:51.720
<v Speaker 1>more passive right, you don't. You don't really have to

0:06:51.720 --> 0:06:54.080
<v Speaker 1>be that active in that business. And but you have

0:06:54.200 --> 0:06:57.160
<v Speaker 1>this money that's coming in. You need something to offset

0:06:57.200 --> 0:07:01.320
<v Speaker 1>that money. And so why not utilize cost segregation? Why

0:07:01.360 --> 0:07:04.360
<v Speaker 1>not dig deeper and really understand, like, Okay, how can

0:07:04.400 --> 0:07:07.440
<v Speaker 1>I really utilize the tax code and things, these things

0:07:07.440 --> 0:07:11.080
<v Speaker 1>to my advantage. And so many people are entitled to

0:07:11.160 --> 0:07:13.800
<v Speaker 1>these things, but they're not aware that they're available. So

0:07:14.280 --> 0:07:17.560
<v Speaker 1>I love cost segregation. I love real estate. It just helps.

0:07:17.640 --> 0:07:19.960
<v Speaker 2>I love depreciate anything depreciation is involved in.

0:07:20.240 --> 0:07:20.920
<v Speaker 1>I love it.

0:07:21.240 --> 0:07:23.680
<v Speaker 2>Like just starts wiping stuff out, So I love it.

0:07:23.920 --> 0:07:27.600
<v Speaker 4>An illegal alien from Guatemala charged with raping a child

0:07:27.600 --> 0:07:31.400
<v Speaker 4>in Massachusetts. An MS thirteen gang member from Al Salvador

0:07:31.640 --> 0:07:35.800
<v Speaker 4>accused of murdering a Texas man of Venezuelan charged with

0:07:35.840 --> 0:07:39.760
<v Speaker 4>filming and selling child pornography in Michigan. These are just

0:07:39.840 --> 0:07:43.600
<v Speaker 4>some of the heinous migrant criminals caught because of President

0:07:43.640 --> 0:07:47.240
<v Speaker 4>Donald J. Trump's leadership. I'm Christy Noman, the United States

0:07:47.240 --> 0:07:52.040
<v Speaker 4>Secretary of Homeland Security. Under President Trump, Attempted illegal border

0:07:52.080 --> 0:07:55.640
<v Speaker 4>crossings are at the lowest levels ever recorded, and over

0:07:55.680 --> 0:07:58.880
<v Speaker 4>one hundred thousand illegal aliens have been arrested if you

0:07:58.960 --> 0:08:02.840
<v Speaker 4>were here illegal. Your next you will be fine nearly

0:08:02.920 --> 0:08:06.920
<v Speaker 4>one thousand dollars a day, imprisoned, and deported. You will

0:08:06.960 --> 0:08:10.600
<v Speaker 4>never return. But if you register using our CBP home

0:08:10.640 --> 0:08:14.040
<v Speaker 4>app and leave now, you could be allowed to return legally.

0:08:14.400 --> 0:08:19.120
<v Speaker 4>Do what's right. Leave now. Under President Trump America's laws,

0:08:19.320 --> 0:08:22.720
<v Speaker 4>border and families will be protected. Sponsored by the United

0:08:22.720 --> 0:08:24.000
<v Speaker 4>States Department of Homeland Security,