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Can we just talk about real estate quickly? Because they know it's course segregation is a lot of different stuff like that. So I know that that's something that people might probably want to be inter us absolutely. So what I'm going to do here is I'm not sure if you guys caught my presentation. I know you guys were going you were going crazy during invest Fest, But I did a presentation during invest Pest, and I want to talk about I want to talk about real estate and
cost segregation and what it means. And a lot of times people are like Listen, I need to make a change. I need to do something. I need to invest in real estate. But what happens is they may get between depreciation expenses and so between depreciation expenses and between the deductions of operating the real estate, they may just come off of it like being tax free. Right, So you may just like be tax free. You can get that
really real estate income. But a lot of times people have business income, Right, you have business income that you're like, listen, I need to offset this business income, and I need an asset that's going to help me do that.
So what exactly do I need to do? Right? So that's great.
I was able to you know, utilize, and my say all the time real estate is one of those amazing, amazing tax.
Deductions where you can win in real life and lose on paper.
And all that means is that in real life you're bringing in money, but on paper because of depreciation, which we talked about when we're talking about vehicles, you're able to now lose on paper. Right, you're now most likely reporting a loss because you're.
Able to take all those deductions.
So basically, what we do to take it a step further, right, So all of my people that's like, listen, I need a higher depreciation expense. So therefore I'm now able to you know, go and deduct all of my you know, deduct my real estate losses and have it offset my business income.
Right, So how can we do that? So we do what's called cost segregation.
Cost surrogation is pretty much just to study, right, is a process that looks at each element of your property. It is It is not something that you can go off and do by yourself. It is an actual analysis that has to be done of your property. And then when it comes to the cost surrogation, what happens is you can also So we talked earlier about bonus depreciation. Right, so bonus appreciation pretty much up until twenty twenty two, it was one hundred percent, but then up until I
mean now it's only sixty percent. But what happens is the IRS says, Okay, every single asset has its specific asset class, right, like it says, hey, this is a building can be written off over twenty seven and a half years. Personal property can be written off over five years. Land improvements can be written off over fifteen years. But how do we utilize bonus appreciation to like magnify or give us more of a depreciation expense. What we can do is, so in this example, we have a house
that's five hundred thousand dollars. Keep in mind, guys, you cannot take bonus depreciation on a building, and you cannot depreciate land.
Okay, So in.
This example, you see that the home is five hundred thousand dollars, the building is two hundred and fifty thousand dollars. You're going to still divide that over twenty seven and a half years. You cannot take bonus appreciation on it. So the depreciation expense there's going to be nine thousand, three hundred and eighty two dollars.
Then you have.
Personal property eighty seven thousand. The depreciation you can take sixty percent on that, So that's going to be fifty two thousand, two hundred dollars depreciation expense that you'll be able to take off of the personal property of your of your of your home.
Right.
And people are like, oh my god, like all of the like, how can you break it up like this? But you break it up because your house is not just a building, right. Your house is made up of different things. So let's dissect the property and really maximize on this depreciation expense. Then you have land improvements. Land improvements so this is like your driveway. So that is twenty five thousand dollars depreciation expense. You can take sixty
percent of its fifteen thousand. That's going to give you a total depreciation expense of seventy six thousand, five hundred and eighty two dollars.
Right.
So, now, if let's just say you did not do cost segregation, and you just said, okay, well I have my home of five thousand dollars and then I had land of one hundred and thirty thousand, I need to back that out. You have about a thirteen thirteen thousand, five.
Hundred dollars expence depreciation expense.
But when you do cost segregation, now you're able to have a depreciation expense of seventy six thousand dollars.
Right.
And so now what that does is, let's say for my you know, for my people that are let's say let's just say you're in real estate, and this is what you're you know, you're doing.
You're doing real estate full time.
And let's just say you're investing in another business that's more passive right, you don't. You don't really have to be that active in that business. And but you have this money that's coming in. You need something to offset that money. And so why not utilize cost segregation? Why not dig deeper and really understand, like, Okay, how can I really utilize the tax code and things, these things to my advantage. And so many people are entitled to
these things, but they're not aware that they're available. So I love cost segregation. I love real estate. It just helps.
I love depreciate anything depreciation is involved in.
I love it.
Like just starts wiping stuff out, So I love it.
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