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Don’t miss out on one of the Largest Tax Benefits for All Short-term Rental/Air B&B Property Owners that translates into cash flow in your pockets today! Key Points for you to understand:
Short-Term Rental Property Owners depreciate the costs for owning their property over 39 years using the standard straight-line method.
The Tax Law allows for a quicker depreciation of certain building components that can generate additional cash flow through accelerated depreciation.
Through a Cost Segregation Study, the average acceleration of building components can be 20-35% of the total basis of the property.
CSSI uses their Engineering Based expertise to segregate and determine which components can be accelerated/taken earlier. Building Components and other Land Improvements can fall into either 5-year, 7- year, 15- year buckets that can be accelerated faster.
Any component or improvement placed in service between 9/27/2017 - 12/31/2022 that has a 20-year tax life or less, qualifies for 100% Bonus Depreciation, which can result in all of the cost of the component being depreciated in the first year. Bonus depreciation is reduced 20%/year beginning in 2023, under current tax laws.
(Example) You buy a property for 1,200,000, the land value is $200,000, so your cost basis would be $1,000,000, that number would be depreciated over a 39-year period (Straight Line Depreciation)
Options 1: (You choose to take the depreciation over the 39 years, leaving you with a depreciation expense every year of $25,641. This depreciation expense can be applied against your income if you are passive investor and if you materially participate, the depreciation expense can be applied against both ordinary income and passive income.
Option 2: (You choose to hire a Cost Segregation Firm and they find on average 20-35% of the $1,000,000 cost basis can be accelerated or even bonused in year 1. This depreciation expense can be applied against your income if you are passive investor and if you materially participate, the depreciation expense can be applied against both ordinary income and passive income.
Would you pay a one-time fee to a 3rd party Cost Segregation Firm to properly allocate these components for your tax preparer, so you can take $200k-$350k of your depreciation sooner or even in year 1?
Property Owners have been using these legal and approved tax strategies for 25 plus years.
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