Bob FraserCFO & Macro Strategist | Data-Driven Investing Expert | Speaker & Author

Cost segregation is one of the few tax tools that is so flexible | Erik Oliver

Name: Cost segregation is one of the few tax tools that is so flexible | Erik Oliver
Uploaded: 2023-01-06T15:00:33+00:00
Duration: 57 s
Channel: Bob Fraser
Description: In this brief monologue, Erik Oliver highlights cost segregation as a uniquely flexible tax strategy. He explains that unlike typical expenses, which…

6 Jan 2023 · 1 min

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In this brief monologue, Erik Oliver highlights cost segregation as a uniquely flexible tax strategy. He explains that unlike typical expenses, which must be deducted in the year incurred, cost segregation can be applied retroactively to a property purchased years earlier. By conducting a cost segregation study on an older asset—such as a rental property bought in 2014—an investor can generate accelerated depreciation deductions that can be pulled forward to offset a current capital‑gain event, potentially eliminating tax liability. Oliver emphasizes that the tool can be held in reserve and deployed only when the taxpayer needs a large deduction, making it a strategic “card” to play in years with high tax burdens.

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Cost segregation is one of the few tax tools that I'm aware of that's so flexible. So a lot of expenses, like if I were to go put a deck on my rental property, I have to take that expense in the current year. I don't get to hold onto it, decide when and if I get to use it. Cost segregation, you don't have to do it in the year you buy a property. So let's say you've bought, let's say you bought a property in 2014. Never did cost segregation, and now all of a sudden you've sold the property, you have a capital gain event, and now you, you know, you're in a tax situation. I can go back and do cost segregation on that property I bought in 2014, pull those deductions forward, offset my current capital gain, and pay no taxes. And so cost segregation, you may not need it this year. You just keep it in your pocket until you do need it. And then you play that card and say, okay, I'm going to do cost segregation this year on this building. Because I need this amount of deduction.