#85 - Cost Segregation: The Tax Strategy You Can’t Afford to Ignore with Erik Oliver

[00:00:00] Welcome back to Passive Income Pilots, everyone. Tait Duryea here in studio.

[00:00:04] In studio. With Ryan Gibson. How you doing, man? Good. Good to see you. We're here and we're broadcasting live from Seattle, Washington. That's right. Beautiful sunny day. Just kidding. The weather's been pretty good here this summer. And so far in October, we've had a little bit of a slow start to our rainy season. Spider season right now. All the spiders are out in the venison to get dark and wet for the rest of the year. But we're overlooking Lake Union right now. And we're watching seaplanes take off from Kenmore Air.

[00:00:27] And so our new office right here on West Lake Avenue North here in Seattle, you know where the Lake Union building is. We're actually in the Union Bay building now, which is right across the street.

[00:00:38] Getting the new studio built out. If you're watching this on YouTube, we got a nice desk, a couple of microphones. It's coming together. So it's only going to get better from here.

[00:00:45] Yeah. And Tait and I are together. Tait's on a layover and we're having a good time here and we're going to talk about today's episode.

[00:00:51] Yeah. And that was on purpose. I picked up this trip just to be in studio today. It's amazing. So check this out.

[00:00:56] If you haven't heard of a cost segregation study, most people haven't. If you're not listening to this show, usually you haven't heard of it, which is bizarre because it is a engineering tool to unlock incredible amounts of depreciation on your real estate. It can save you a lot of money in taxes.

[00:01:11] Yeah. And you might be thinking, hey, didn't you guys record somebody like a bunch of episodes ago? But we've had a ton of questions from our Passive Income Pilots Facebook private forum.

[00:01:19] Specifically, Joshua and Carlos asked a couple of questions. So we're going to get into that later on in the show. We're going to answer your questions more directly, more head on.

[00:01:27] But this is a great reminder. If you have a question and you want to ask us, you can go to ask at passiveincomepilots.com.

[00:01:33] You can email us that way or you can go through our website, passiveincomepilots.com or you go join our Facebook group.

[00:01:39] Yeah. Facebook group is almost a thousand pilots strong now.

[00:01:41] Yeah. A thousand aviators that are focused on investing and it's become a very collaborative group.

[00:01:47] So thanks for joining. And let's talk a little bit more about our guest today.

[00:01:50] Yeah. Eric Oliver, Vice President, National Account of the Cost Segregation Authority.

[00:01:55] This is a huge national cost segregation firm can do cost segs in any of the 50 states.

[00:02:00] So definitely check them out. Let's get straight to the show. This was super interesting.

[00:02:04] Let's get to it.

[00:02:09] Welcome to Passive Income Pilots, where pilots upgrade their money.

[00:02:14] This is the definitive source for personal finance and investment tactics for aviators.

[00:02:20] We interview world-renowned experts and share these lessons with the flying community.

[00:02:25] So if you're ready for practical knowledge and insights, let's roll.

[00:02:29] Hey, Eric, it's great to have you on the show.

[00:02:31] It's so much fun meeting you at a conference and then bringing you on to the podcast.

[00:02:35] To share your knowledge with our listeners on all things cost segregation.

[00:02:39] So Eric, why don't you just give us a little background about yourself?

[00:02:42] Yeah. Thanks for having me. I'm glad to be here.

[00:02:43] So my background is, let's see, go back to the college days.

[00:02:48] I was in college, didn't know what I wanted to do when I grew up, but math had always come somewhat easy.

[00:02:53] Couldn't write a paper to save my life. Never liked the sciences, but math was somewhat, came easy for me, luckily.

[00:02:58] So it was either a finance or accounting degree.

[00:03:00] I ended up in accounting. Like most people who graduate with accounting degrees, I'd never pursued my CPA.

[00:03:05] I was just, went into business development.

[00:03:08] And my business development job took me to the East Coast for a number of years.

[00:03:11] I was born and raised in Salt Lake City, Utah.

[00:03:13] Once I got out of college, that business development career took me to Virginia for a number of years, then New York.

[00:03:19] I'm looking to move back West and didn't know what I wanted to do.

[00:03:23] I had some business development background.

[00:03:25] I had an accounting degree and came across something called cost segregation.

[00:03:29] And to be honest with you, I didn't know what cost segregation was at the time.

[00:03:32] Before I interviewed for the job, I knew it had to do with accounting.

[00:03:35] And so I was halfway there, but didn't know exactly what it was.

[00:03:39] So got online, started looking at YouTube videos.

[00:03:41] I had dabbled in some real estate myself.

[00:03:44] Once I realized what cost segregation was, I was very intrigued about the job opportunity.

[00:03:49] And so I applied for the job.

[00:03:50] That job brought me out here about eight years ago with a company called Cost Segregation Authority.

[00:03:55] They're doing cost segregation studies ever since.

[00:03:58] Have loved it.

[00:03:59] It's been a great career and been able to use some of my background to help investors reduce tax liabilities.

[00:04:06] So, so far, I've really enjoyed it.

[00:04:08] That's fantastic.

[00:04:09] Well, can you break down what a cost segregation study is?

[00:04:12] Maybe the way that we get to that is to talk about how we depreciate real estate.

[00:04:17] What depreciation is, how we depreciate real estate so that, so we can kind of set the stage.

[00:04:23] And then we can talk about what a cost segregation is and what that can unlock for you as a different way to depreciate that real estate.

[00:04:30] Yeah.

[00:04:31] So depreciation is just the IRS or the government allows us to take an expense.

[00:04:36] It's a non-cash expense every year on our real estate.

[00:04:40] So if you think about a building, the material within that building deteriorates every year.

[00:04:45] And so that building, in theory, is worth less or has less value.

[00:04:50] Now, we know that's not always true.

[00:04:51] Real estate tends to go up in value.

[00:04:53] But the building itself, the material becomes dilapidated over time.

[00:04:57] And so the government or the IRS allows us to take this depreciation expense.

[00:05:01] Again, it's a non-cash expense.

[00:05:02] For residential units, it's depreciated over 39 years.

[00:05:07] For commercial units, it's depreciated over 39 years.

[00:05:11] Residential units, it's 27 and a half.

[00:05:13] So just to make the math easy, let's say you've got an office condo that you paid $390,000 for.

[00:05:20] Essentially, you're going to get a $10,000 write-off every year for the next 39 years.

[00:05:25] I've oversimplified that a little bit.

[00:05:27] Land is non-depreciable, so you always have to back out the land value.

[00:05:30] But the idea is you're taking this standard deduction or 1 39th of a deduction every year

[00:05:36] until that property is fully depreciated.

[00:05:39] That's called straight-line depreciation.

[00:05:40] That's what a lot of investors do.

[00:05:42] They get a closing statement.

[00:05:43] They buy a building for $390,000.

[00:05:45] They give that closing statement to their tax preparer, and they enter it in as a 39-year asset.

[00:05:50] The challenge with that or the problem with that is I may not own my building for 39 years,

[00:05:55] and I want my deductions a lot faster than that if I can.

[00:05:57] And so the way we can legally do that is through a cost segregation study where we go in and identify these short-term assets.

[00:06:05] So when you buy an office condo or let's say you buy a residential rental or a short-term rental,

[00:06:11] you're not just buying the land and the walls.

[00:06:13] You're also buying some cabinets, some countertops, a retaining wall, a fence, a driveway.

[00:06:19] All those items I mentioned, the IRS says should be depreciated over a shorter useful life than 39 years or 27 and a half.

[00:06:27] The challenge is that when we give that closing statement to our tax preparer,

[00:06:32] most tax preparers don't have the knowledge to be able to go into that asset and say,

[00:06:37] okay, you paid $390,000 for this short-term rental.

[00:06:40] What is the driveway worth?

[00:06:41] Well, they don't know if the driveway is four inches of concrete or six inches of concrete,

[00:06:46] let alone what the value of that would be worth.

[00:06:48] And so a cost segregation study, just as the name implies,

[00:06:51] is we go in and segregate the cost of the building into different buckets

[00:06:56] that allows you to front load or take the depreciation at a much faster rate.

[00:07:00] And again, you know, there's time value of money.

[00:07:02] There's inflation.

[00:07:03] A dollar today is worth way more than a dollar 39 years from now.

[00:07:06] So give me my deductions now versus letting the IRS hold on to these.

[00:07:10] And so that's kind of what we're doing when we're looking at cost segregation is

[00:07:13] we're just front loading or taking the deductions at a much faster rate.

[00:07:17] And it's my understanding that the IRS looks at this as the correct way to depreciate real estate, right?

[00:07:23] Yeah, no, that's true.

[00:07:24] Straight line depreciation, you're like, hey, we don't care if you want to do that.

[00:07:27] We'll give you less tax breaks, sure.

[00:07:29] But they actually look at breaking out all of the different components into their proper depreciation categories.

[00:07:36] into their proper depreciation schedules is the correct way to do it.

[00:07:39] Because they know that a refrigerator isn't going to last 27 and a half years in a rental house, right?

[00:07:43] Yeah.

[00:07:44] And a roof isn't going to last 39 years on a commercial property.

[00:07:47] No, you hit it on the head.

[00:07:48] There's actually a book.

[00:07:49] It's a couple thousand pages thick where the IRS basically lists everything that can be depreciated

[00:07:54] and tells you what category it should go in.

[00:07:56] But again, for so many years, people would buy a building with all this stuff in it

[00:08:01] and there was no way to break it out.

[00:08:03] We knew that the carpet wasn't going to last 39 years,

[00:08:05] but who was going to be able to come in here and tell us, you know, of my million dollar purchase price,

[00:08:10] the carpet was worth $82,754.

[00:08:14] And so that's where engineering firms came together.

[00:08:16] There was a court case testing my history here.

[00:08:20] I think it was in 94 or 97 with Hospital Corporation of America.

[00:08:24] They're a big healthcare company out of Tennessee.

[00:08:26] They've got multiple hospitals through the mid-Atlantic area,

[00:08:29] but they had some pretty savvy tax accounts who said,

[00:08:31] hey, we've got all this linoleum flooring in our hospitals.

[00:08:34] Why are we depreciating this linoleum flooring over 39 years?

[00:08:37] And so they broke it out and they came up with a methodology to break it out.

[00:08:42] And everything they broke out in that court case, the IRS said, hey, wait, why do you have all these deductions?

[00:08:47] What's going on here?

[00:08:48] It ended up in the highest tax court.

[00:08:49] But when it was all said and done,

[00:08:51] they won on just about 95% of the stuff that they had segregated out.

[00:08:55] And the IRS says, yeah, you're right.

[00:08:57] In our guide, we say that linoleum flooring is a five-year asset.

[00:09:00] So you're not doing anything wrong by depreciating that linoleum flooring over five years.

[00:09:04] And so that's kind of where it was started from.

[00:09:06] So let's break this down to be a little bit more practical.

[00:09:09] So $390,000 house, you're going to depreciate $10,000 per year in straight line for 39 years.

[00:09:17] That's great.

[00:09:18] So you're saying I'm going to get a $10,000 tax break automatically for doing nothing,

[00:09:22] just straight line depreciation.

[00:09:24] Well, let me just clarify tax deduction.

[00:09:26] So that's not a, yeah, tax deduction.

[00:09:27] It comes off of your taxable income,

[00:09:29] but a $10,000 tax deduction is probably worth,

[00:09:32] you know, for a high income earner at 37% tax bracket,

[00:09:35] that's a $3,700 tax savings.

[00:09:37] Yeah.

[00:09:38] Yeah.

[00:09:38] And if I make $10,000 in profit, that would offset that profit, right?

[00:09:43] Yep, exactly.

[00:09:44] Perfect.

[00:09:45] And so by breaking it up in these buckets,

[00:09:48] I think what you're trying to say is it might not be $10,000,

[00:09:51] it might be $20,000 or $30,000.

[00:09:54] Yeah, it could really add up quickly.

[00:09:56] So just to give you an example on a 300,

[00:09:59] let's use that example, $390,000 Airbnb per se.

[00:10:03] So normally that gets depreciated over 39.

[00:10:06] Airbnbs are a little bit interesting

[00:10:07] because some people think of it as a residential rental,

[00:10:10] but in fact, the IRS actually looks at it more like a hotel.

[00:10:13] So as long as the average stay is less than seven days,

[00:10:17] it's more of a transient use than it is a long-term rental.

[00:10:20] And so most oftentimes short-term rentals are depreciated over 39 years.

[00:10:25] So if you have a $390,000 short-term rental,

[00:10:28] you're going to be looking at,

[00:10:31] we usually segregate on rental homes somewhere around 30%.

[00:10:36] So you're looking at somewhere around $120,000,

[00:10:40] $115,000 to $120,000 of short-term assets.

[00:10:44] So we're going to go in and say, okay, the appliances are worth 12,

[00:10:46] the cabinets are worth 20,

[00:10:48] and all that stuff added together is going to be around $115,000 to $120,000.

[00:10:53] Now that $120,000 now gets to be depreciated over either five years for some of it,

[00:11:00] seven years for some of it, or 15 years for some of it.

[00:11:03] So now instead of depreciating it over 39,

[00:11:05] we're taking those buckets of money and depreciating it at a faster rate.

[00:11:09] And so your $10,000 deduction you would get using straight line

[00:11:14] could essentially be a $70,000 or $80,000 deduction

[00:11:18] by segregating and putting them in the correct asset lives.

[00:11:21] And then there's something else that we may get into called bonus depreciation,

[00:11:24] which kind of puts cost segregation on steroids

[00:11:27] and allows you to take it at even a faster rate.

[00:11:29] Yeah, I was just trying to get down to like the edge,

[00:11:32] like the business case, right?

[00:11:33] So if you're thinking about doing this or not doing this,

[00:11:36] you know, a straight line will get you 10K.

[00:11:38] Maybe, you know, this accelerated depreciation would,

[00:11:41] you know, cost segregation study might bump that up, right?

[00:11:44] To $20,000, $30,000 a year.

[00:11:46] And when you're thinking, what is the so what?

[00:11:48] You nailed it.

[00:11:49] If you're in that 37% tax bracket,

[00:11:51] now you're making about $3,700,

[00:11:53] you're getting $3,700 in tax savings potentially per year.

[00:11:57] And then when you're evaluating the cost

[00:12:00] of maybe what one of these studies would be,

[00:12:02] Eric, what would you say?

[00:12:03] I mean, we're not going to hold you to the exact amount of this,

[00:12:06] you know, is being listened to, you know,

[00:12:07] five years from now or whatever.

[00:12:09] But about what would you say?

[00:12:11] I mean, that $390,000 property,

[00:12:13] what can I expect to pay?

[00:12:15] Give us a ballpark.

[00:12:16] Yeah, no, ballpark.

[00:12:17] So usually on any single family rental,

[00:12:19] short-term rental under about 5,000 square feet,

[00:12:22] you're probably somewhere $2,800 to $3,200.

[00:12:27] For some of the real larger residentials,

[00:12:29] it might be $3,500, $3,600.

[00:12:31] And then you get into commercial properties,

[00:12:33] it can be as much as $20,000

[00:12:34] for a large office complex with multiple buildings.

[00:12:37] But for most of your short-term rentals,

[00:12:39] your residential rentals,

[00:12:40] you're somewhere in that $2,800 to $3,200 range.

[00:12:43] Yeah, so if you're evaluating, is this worth it?

[00:12:45] Hmm, let me think about this, right?

[00:12:47] Do some quick math.

[00:12:48] Always consult with your tax legal

[00:12:50] and investment advisor on this kind of stuff.

[00:12:52] But, you know, at the same time, you know,

[00:12:54] this might be just a no-brainer, right?

[00:12:56] Where if you pay a little bit,

[00:12:57] now you're going to get that instant tax.

[00:12:58] You're going to get that credited,

[00:12:59] basically, back into your taxes right away.

[00:13:02] What I wanted to touch on here was,

[00:13:05] Eric, you're going to give an example

[00:13:06] of a short-term rental that you bought

[00:13:08] that you ran a cost segregation study on.

[00:13:10] If you're a listener to this show,

[00:13:13] you've heard my story about the Reno Airbnb

[00:13:15] that we put into service last year.

[00:13:17] We did a cost segregation on that.

[00:13:19] We got, I believe, $140,000 write-off.

[00:13:22] Nice.

[00:13:22] And regardless of real estate professional status,

[00:13:25] because it's a short-term rental,

[00:13:26] you're able to write that off against your W-2.

[00:13:28] I'm going to say that again.

[00:13:29] If it's a short-term rental,

[00:13:31] and you buy an Airbnb,

[00:13:32] and the average length of stay is less than seven days,

[00:13:35] and you spend at least 100 hours managing it

[00:13:37] in their current calendar year,

[00:13:39] then that loss, that depreciation loss,

[00:13:42] can offset your W-2.

[00:13:43] So if you're making a half million dollars a year

[00:13:45] as an airline pilot,

[00:13:46] you should be listening very closely to this strategy

[00:13:49] because you're in the highest tax bracket,

[00:13:51] and every one of those dollars that you deduct

[00:13:54] is good for 37,

[00:13:56] or if you're in a high state income tax state,

[00:13:59] could be even upwards of 50% on the dollar.

[00:14:02] Yeah, that's incredible.

[00:14:04] Yeah, so I just think that it's worth exploring this

[00:14:07] and at least having a conversation.

[00:14:08] By the way, can somebody just call you

[00:14:10] and just talk to you about their situation?

[00:14:12] How does that work, Eric?

[00:14:13] Are you kind of available for that?

[00:14:15] Yeah, no, we always will do

[00:14:17] what we call a free benefit analysis.

[00:14:18] So we don't ever want to engage somebody to work with us

[00:14:21] if they're not going to save significant tax dollars.

[00:14:23] We want to make sure that the savings is well worth

[00:14:26] what they're going to pay for us to do the study.

[00:14:28] And so we'll get on the phone,

[00:14:30] we'll ask some questions,

[00:14:31] we'll get some information on the property,

[00:14:32] we'll run an analysis to say,

[00:14:34] here's what we can expect conservatively

[00:14:36] should you do a cost-sake study.

[00:14:38] Here's what our fee would be.

[00:14:40] And then we always advise them

[00:14:41] to check with their tax preparers

[00:14:43] to make sure that they can in fact use the deductions,

[00:14:45] you know, versus active versus passive.

[00:14:47] But yeah, it can save significant dollars,

[00:14:52] you know, for the right person.

[00:14:53] So let's talk about the downsides.

[00:14:55] Are there any downsides to this?

[00:14:57] You know, there's not.

[00:14:59] So it's not for everybody.

[00:15:01] As Tate mentioned that we do have active versus passive income limitations.

[00:15:05] So if you're not a real estate professional,

[00:15:08] then you may be limited to how much of a deduction you can take.

[00:15:12] So having paying us to create a big, huge deduction,

[00:15:14] if you can't use it, doesn't create any tax savings.

[00:15:18] But what Tate was referring to is the short-term rental loophole.

[00:15:21] I even hate to use the word term loophole

[00:15:23] because it sounds like we're doing something nefarious,

[00:15:24] but we're not, it's actually in the tax code.

[00:15:27] And if you go back to what I said earlier,

[00:15:29] these short-term rentals are treated more like hotels.

[00:15:32] And so what Tate was getting at is you basically are running

[00:15:35] and managing actively a hotel business.

[00:15:38] So I'm a W-2 earner.

[00:15:40] I had a tax liability at the end of 2022.

[00:15:43] I knew I was going to owe a bunch of taxes come 2022 tax filing time.

[00:15:47] And so it was just about October.

[00:15:49] And I said, honey, we got to do something.

[00:15:51] My wife is a, she's in the school district.

[00:15:53] So she's a W-2 employee.

[00:15:54] I'm a W-2 employee.

[00:15:56] I have some long-term rentals that I have,

[00:15:59] but if I do cost-sake studies on those long-term rentals,

[00:16:02] those deductions from those long-term rentals

[00:16:04] can only be used to offset the income

[00:16:06] from those long-term rentals

[00:16:07] or what is considered passive income.

[00:16:09] So that wasn't going to help me out

[00:16:10] because my income was all from my W-2 job

[00:16:13] and my wife's W-2 job.

[00:16:14] So we looked at some,

[00:16:16] we actually just stumbled across a short-term rental

[00:16:18] at a Lake Town near us.

[00:16:20] And we went and put 80,000 down on that property.

[00:16:24] I spent a hundred hours,

[00:16:25] as Tate mentioned,

[00:16:26] from October through December.

[00:16:28] You have to spend a hundred hours

[00:16:29] and more time than anybody else.

[00:16:31] So I strategically bought it at the end of the year

[00:16:34] because I knew I needed to spend more time

[00:16:36] than the cleaner,

[00:16:37] more time than the maintenance folks.

[00:16:38] So I bought it at the end of the year.

[00:16:40] It took me well over a hundred hours

[00:16:41] to furnish the place and get it ready to go.

[00:16:44] Then I did my cost seg study.

[00:16:46] It's interesting.

[00:16:47] You said yours was 140,000.

[00:16:49] Tate, mine was right at 140,000 as well.

[00:16:51] So I got $140,000 deduction.

[00:16:53] Come the following year, 2023,

[00:16:55] I hired a management company.

[00:16:56] I no longer had to manage the property myself

[00:16:58] because I got my deduction in the year

[00:17:00] that I did manage it.

[00:17:01] So it was considered an active deduction.

[00:17:03] And I was able to use that

[00:17:04] to offset $140,000 of my active income.

[00:17:08] So if you're in a 37% tax bracket,

[00:17:11] I got to get the calculator for this,

[00:17:12] but 140,000 times a 37% tax bracket,

[00:17:17] that's $51,000 in taxes.

[00:17:19] And I put 80,000 down on this property.

[00:17:21] So my 80,000 down payment,

[00:17:23] I got 51,000 back.

[00:17:25] And I've got a revenue generating property now

[00:17:27] that spits off income.

[00:17:29] I actually, the area I got it in,

[00:17:31] I wasn't so worried about the cashflow.

[00:17:33] I get a little bit of cashflow.

[00:17:34] It's a seasonal summer property.

[00:17:37] It does more than break even.

[00:17:38] I get a little cashflow,

[00:17:39] but I was in it for the appreciation

[00:17:41] and I was in it for the tax.

[00:17:43] And I was going to send

[00:17:44] an $80,000 check to the government.

[00:17:46] Instead, I got 51,000 of that back.

[00:17:49] So yeah, absolutely.

[00:17:51] And if you tie together episode 78

[00:17:53] with Casey Roloff

[00:17:55] and the Seabrook investment,

[00:17:57] right, just connecting dots here.

[00:17:59] Yep.

[00:17:59] That was actually in an opportunity zone.

[00:18:01] So you could buy a new build

[00:18:03] in an opportunity zone.

[00:18:04] So if you had gains

[00:18:05] from other investments,

[00:18:06] you could take the $51,000 tax break

[00:18:08] plus any gains that you made

[00:18:10] from other investments,

[00:18:12] you know, from sale of business,

[00:18:14] sale of stock,

[00:18:15] sale of real estate,

[00:18:16] and you could completely wipe out your...

[00:18:18] So there's a lot of layering

[00:18:19] that goes on here, right?

[00:18:20] And then, you know,

[00:18:21] we have another episode

[00:18:22] where we talk about

[00:18:23] life insurance strategies, right?

[00:18:25] So you'd be leveraging that money

[00:18:26] to put the money down

[00:18:27] that you do buy

[00:18:28] and then you get all these tax credits

[00:18:29] and savings and things like that.

[00:18:31] So we had an episode

[00:18:32] talking about ways to access cash,

[00:18:34] 401k loan.

[00:18:35] It's like there's a lot of ways

[00:18:36] that you could borrow money

[00:18:38] from a HELOC

[00:18:38] from a property you already own.

[00:18:40] Roll it into, you know,

[00:18:42] an Airbnb,

[00:18:43] take a massive tax deduction.

[00:18:45] And I always say

[00:18:46] the government is subsidizing

[00:18:47] your down payments on these things.

[00:18:49] They actually, yeah,

[00:18:50] especially with the bonus depreciation,

[00:18:52] like I said,

[00:18:52] it just puts cost segregation

[00:18:53] on steroids.

[00:18:54] And so these benefits can be huge.

[00:18:57] And I look at it,

[00:18:59] like you said,

[00:18:59] I'm either giving this money

[00:19:00] to the IRS

[00:19:01] and God knows

[00:19:01] what they're going to do with it,

[00:19:02] or I'm creating,

[00:19:03] hopefully, long-term wealth.

[00:19:05] I mean, this property

[00:19:05] will appreciate over time.

[00:19:07] And I got it

[00:19:08] for a small down payment.

[00:19:10] It cost me $30,000 down,

[00:19:11] but I saved, you know,

[00:19:13] close to $51,000 in taxes.

[00:19:15] Amazing.

[00:19:15] It's a no-brainer.

[00:19:16] So if you've got high W-2 income,

[00:19:18] and I found this too,

[00:19:20] we work with a lot of,

[00:19:21] you know,

[00:19:21] high W-2 doctors,

[00:19:23] lawyers, pilots

[00:19:24] on this strategy.

[00:19:25] And a lot of them

[00:19:27] have second homes anyway.

[00:19:30] Now, slicking home,

[00:19:31] there is some clarification

[00:19:32] between a second home

[00:19:33] and a short-term rental.

[00:19:34] You can only spend,

[00:19:35] I think it,

[00:19:36] technically it's 14 days

[00:19:37] at the property.

[00:19:38] But turning your second home,

[00:19:40] if you start renting that out

[00:19:41] as a short-term rental

[00:19:42] and you manage it,

[00:19:43] all of a sudden

[00:19:44] you might have

[00:19:44] some significant tax benefits.

[00:19:46] So a lot of us

[00:19:48] are already doing it anyways,

[00:19:49] and so it's just something

[00:19:50] to look into

[00:19:50] with your tax preparer.

[00:19:52] Let's unpack that a little bit.

[00:19:53] So like,

[00:19:53] if you had a short-term,

[00:19:55] if you had a second home

[00:19:56] that you purchased

[00:19:57] in say 2020,

[00:19:58] and now it's 2024,

[00:20:00] and you want to convert that

[00:20:01] to a short-term rental,

[00:20:02] can you retroactively

[00:20:03] go back and do anything?

[00:20:04] Or how would that work?

[00:20:06] How would that nuance play in

[00:20:07] if I'm sitting here thinking,

[00:20:08] oh yeah,

[00:20:08] I've got that second home

[00:20:09] and I want to do this

[00:20:11] and I want to convert it

[00:20:12] into a short-term rental.

[00:20:13] Like,

[00:20:13] what does that look like

[00:20:14] in this scenario?

[00:20:15] Yeah,

[00:20:16] so you can convert it

[00:20:17] into a short-term rental

[00:20:18] and you do get to take

[00:20:19] depreciation on it.

[00:20:20] The one,

[00:20:21] it's not really a downside.

[00:20:23] The one factor to consider

[00:20:24] is your starting basis

[00:20:25] is not what it's worth

[00:20:26] when you turn it

[00:20:28] into a short-term rental.

[00:20:29] It's what it's worth

[00:20:30] or what you paid for it

[00:20:31] back in 2020.

[00:20:32] Right.

[00:20:33] So that would be

[00:20:33] your starting basis.

[00:20:34] Your in-service date

[00:20:36] would be the date

[00:20:36] that it became available

[00:20:37] for its intended use

[00:20:38] or purpose as a rental,

[00:20:40] and then you may

[00:20:41] or may not get

[00:20:42] bonus depreciation on it

[00:20:43] depending on when

[00:20:44] you originally bought it.

[00:20:45] If you bought it in 2012

[00:20:47] when there was no bonus,

[00:20:48] you wouldn't get bonus on it.

[00:20:49] But if you bought it in 2021

[00:20:50] and didn't put it into rental

[00:20:52] until 2023 or 4,

[00:20:54] you may be eligible for bonus.

[00:20:56] So yeah,

[00:20:56] we see a lot of people

[00:20:58] doing that.

[00:21:00] Again,

[00:21:00] you just got to be careful

[00:21:01] because the IRS

[00:21:02] will look at intent.

[00:21:03] It always comes down

[00:21:04] to intent

[00:21:04] and it's up to you

[00:21:07] to substantiate your intent.

[00:21:08] So if you,

[00:21:09] I mean,

[00:21:09] some people try

[00:21:10] and get real tricky.

[00:21:11] I got to be honest.

[00:21:11] They'll call us and be like,

[00:21:12] okay,

[00:21:12] I've got this.

[00:21:13] I'm a doctor.

[00:21:14] I've got this short-term rental.

[00:21:15] I've got this second home

[00:21:16] up in Tahoe.

[00:21:17] If I listed on Airbnb

[00:21:19] for the month of December

[00:21:20] and then take it off,

[00:21:22] can I get all those deductions?

[00:21:23] And the answer is like,

[00:21:24] yes,

[00:21:24] you can.

[00:21:25] However,

[00:21:25] if you're ever audited,

[00:21:27] they're going to throw it all out

[00:21:28] and you're going to owe

[00:21:28] the IRS money.

[00:21:29] So their IRS

[00:21:30] is looking at intent.

[00:21:31] And so just be careful.

[00:21:33] Always consult

[00:21:33] with your tax preparer.

[00:21:34] I know we've mentioned

[00:21:35] that a couple of times,

[00:21:36] but it's important

[00:21:37] to make sure everyone's on board

[00:21:39] and everyone understands

[00:21:40] the risk that's involved.

[00:21:40] But there's not a lot of risk.

[00:21:41] If you're going about it

[00:21:42] the right way,

[00:21:43] if you're buying short-term rentals

[00:21:44] and you're managing short-term rentals,

[00:21:47] there's court cases

[00:21:48] where you just have to document it,

[00:21:50] document your time,

[00:21:51] make sure you're keeping logs.

[00:21:53] And,

[00:21:53] you know,

[00:21:54] I don't mind keeping a log

[00:21:55] of 100 hours

[00:21:56] if I'm going to save

[00:21:56] $51,000 in taxes.

[00:21:58] I'll do that all day long.

[00:21:59] So,

[00:22:00] yeah.

[00:22:01] And yeah,

[00:22:01] that's great

[00:22:01] that you were able

[00:22:02] to write off more

[00:22:03] than your down payment

[00:22:04] on the house.

[00:22:04] We were a little bit lopsided.

[00:22:07] I think we put down $180

[00:22:08] on a $729,000 purchase,

[00:22:10] but I mean,

[00:22:12] $142,000 off my W-2.

[00:22:15] I mean,

[00:22:15] it's just unbelievable.

[00:22:17] All right.

[00:22:17] Let's touch on bonus depreciation.

[00:22:20] Do you unpack

[00:22:21] the entire thing for us

[00:22:23] from start?

[00:22:23] So just to clarify real quick,

[00:22:25] we haven't talked

[00:22:26] about bonus depreciation at all.

[00:22:27] So all this short-term

[00:22:29] cost seg study stuff

[00:22:31] has nothing to do

[00:22:32] with bonus depreciation.

[00:22:33] Right.

[00:22:33] This is a new subject

[00:22:34] that we're introducing

[00:22:35] into the conversation.

[00:22:36] Correct.

[00:22:37] Yeah.

[00:22:37] Yep.

[00:22:37] Great point.

[00:22:38] So bonus depreciation

[00:22:39] is a tool that the government

[00:22:41] uses to stimulate the economy.

[00:22:43] So it's been around

[00:22:44] for a number of years

[00:22:45] and the government

[00:22:45] will get together

[00:22:46] and say,

[00:22:46] okay,

[00:22:46] the economy's not doing well.

[00:22:48] We want people to go out

[00:22:49] and buy stuff.

[00:22:50] So we're going to incentivize them

[00:22:52] by giving them

[00:22:52] bonus depreciation.

[00:22:54] So they would be anywhere

[00:22:55] from 20%,

[00:22:56] 30%,

[00:22:57] 50%,

[00:22:58] all the way up

[00:22:58] to 100% bonus depreciation.

[00:23:00] And what that means is,

[00:23:02] is if you were to buy an asset,

[00:23:04] let's just,

[00:23:05] I'm going to use a bulldozer

[00:23:05] for an example.

[00:23:06] Buy a million dollar bulldozer.

[00:23:08] It had to have me

[00:23:09] to certain criteria

[00:23:10] to be eligible for bonus.

[00:23:12] One,

[00:23:12] it had to be brand new.

[00:23:13] I couldn't buy a used bulldozer.

[00:23:15] The government wanted me

[00:23:16] to go out

[00:23:17] and stimulate manufacturing

[00:23:18] and all that.

[00:23:18] So they made me go buy

[00:23:19] a brand new bulldozer

[00:23:20] and that bulldozer

[00:23:22] had to have a useful life

[00:23:23] of 20 years or less.

[00:23:24] And I think that's interesting

[00:23:25] because I don't think

[00:23:26] that the IRS

[00:23:27] intended for bonus depreciation

[00:23:29] to be used in real estate

[00:23:30] because remember,

[00:23:31] real estate's 27 and a half

[00:23:32] or 39 years.

[00:23:33] So that was pre-2017.

[00:23:36] So brand new property,

[00:23:37] brand new equipment,

[00:23:39] had to have a useful life

[00:23:39] of 20 years or less.

[00:23:41] And at the time in 2017,

[00:23:42] you were eligible

[00:23:43] for 50% bonus.

[00:23:45] So if you bought

[00:23:45] a million dollar bulldozer,

[00:23:47] you would get to take

[00:23:48] 500,000 of depreciation

[00:23:50] or 50% in year one,

[00:23:52] the other 50% would get spread out

[00:23:54] over the useful life

[00:23:55] of the bulldozer.

[00:23:56] Fast forward to the end of 2017

[00:23:58] with the Tax Cuts and Jobs Act.

[00:24:00] Donald Trump was our president.

[00:24:01] Donald Trump owned real estate.

[00:24:02] And Donald Trump

[00:24:03] was very favorable

[00:24:04] to real estate investors

[00:24:05] when he revised the tax code.

[00:24:07] And they made a couple changes.

[00:24:08] One is it went from 50% bonus

[00:24:10] to 100% bonus.

[00:24:12] So any assets that you bought

[00:24:14] between 927 of 17

[00:24:18] and 1231 of 2022

[00:24:20] were eligible for 100% bonus.

[00:24:23] So if I went out

[00:24:24] and bought a bulldozer

[00:24:25] for a million bucks,

[00:24:27] I got to take

[00:24:27] a million dollar write-off

[00:24:28] in year one.

[00:24:29] Now, that was the first big change.

[00:24:31] The second big change was

[00:24:32] they added five words

[00:24:35] to the tax code

[00:24:36] that I think made

[00:24:37] a huge difference.

[00:24:38] They added the words

[00:24:39] new to you, the taxpayer.

[00:24:42] I think that might actually

[00:24:43] be six words.

[00:24:44] New to you, the taxpayer.

[00:24:45] New to you, the taxpayer.

[00:24:47] I told you, English was not.

[00:24:48] I don't know if it was taxpayer

[00:24:49] one word.

[00:24:49] English was not my forte.

[00:24:51] Ask me a math problem.

[00:24:52] I can help you.

[00:24:53] But English was not my forte.

[00:24:54] So anyways,

[00:24:55] they added five or six words

[00:24:57] to the tax code

[00:24:58] that said basically

[00:24:59] new to you, the taxpayer.

[00:25:01] So now I don't have to go

[00:25:02] buy a brand new bulldozer.

[00:25:04] I can go buy a used bulldozer.

[00:25:06] That's new to me, the taxpayer.

[00:25:08] And all of a sudden,

[00:25:09] I get bonus.

[00:25:10] So I don't know

[00:25:11] how many of your listeners

[00:25:12] are buying bulldozers.

[00:25:13] So let's flip this

[00:25:15] to real estate

[00:25:15] and see how this

[00:25:16] applies to real estate.

[00:25:17] But essentially,

[00:25:18] if you go buy

[00:25:19] a piece of real estate,

[00:25:20] so you buy a short-term rental

[00:25:22] in 2019,

[00:25:24] falls within that 100% window.

[00:25:26] You buy it in 2019

[00:25:27] and let's say you buy it

[00:25:29] for $400,000.

[00:25:30] And let's say we determine

[00:25:31] the land is worth $100,000.

[00:25:33] So you have to back out the land.

[00:25:34] So you have $300,000

[00:25:35] of depreciable basis.

[00:25:37] When you tie bonus depreciation

[00:25:39] and cost seg together,

[00:25:40] remember,

[00:25:41] we segregate around 30%

[00:25:42] of that $300,000

[00:25:43] into short-life assets.

[00:25:45] Assets that have a useful life

[00:25:47] of 20 years or less.

[00:25:49] Remember,

[00:25:49] it's 5, 7, and 15.

[00:25:51] So of that $300,000 building,

[00:25:53] we're going to find

[00:25:54] $100,000 worth of stuff

[00:25:56] that can be segregated.

[00:25:58] And now that $100,000 worth

[00:26:00] of stuff,

[00:26:01] you get 100% bonus depreciation

[00:26:04] on that stuff.

[00:26:05] So instead of depreciating

[00:26:06] that over 5, 7, and 15 years,

[00:26:09] you get to take 100%

[00:26:10] of it all in year one.

[00:26:11] So you're getting

[00:26:12] the whole $100,000 deduction

[00:26:14] in year one.

[00:26:15] Now, bonus depreciation

[00:26:17] is starting to phase out.

[00:26:18] So as I mentioned,

[00:26:20] anything bought

[00:26:21] between 927 of 17

[00:26:23] and 1231 of 2022

[00:26:25] was eligible for 100%.

[00:26:28] Anything bought

[00:26:29] in 2023 was 80%.

[00:26:31] Anything here in 2024

[00:26:33] is 60%.

[00:26:34] Next year,

[00:26:35] it's 40%.

[00:26:36] In saying that,

[00:26:38] the government has,

[00:26:40] there was a bill

[00:26:41] introduced

[00:26:42] at the beginning of this year

[00:26:43] to extend the 100% bonus

[00:26:45] through 2026.

[00:26:46] It passed the House

[00:26:48] unanimous,

[00:26:48] almost unanimously

[00:26:50] with bipartisan support.

[00:26:52] It got to the Senate

[00:26:53] and there was a few senators

[00:26:54] that were like,

[00:26:55] you know what?

[00:26:55] We're in a presidential

[00:26:56] election year.

[00:26:57] We're not going to pass

[00:26:58] any tax stuff this year.

[00:27:00] It's going to look good

[00:27:00] for Biden.

[00:27:01] We don't want to do that.

[00:27:02] So we're going to

[00:27:03] stall this bill.

[00:27:05] We're going to wait

[00:27:05] until after the presidential election.

[00:27:07] In my opinion,

[00:27:09] regardless of who wins

[00:27:10] the presidential election,

[00:27:12] Congress will get back together

[00:27:13] after this election

[00:27:14] and they will put together

[00:27:15] a comprehensive tax bill

[00:27:16] that most likely

[00:27:18] will extend

[00:27:18] the 100% bonus.

[00:27:20] The reason I say that is,

[00:27:21] one,

[00:27:22] everyone in Washington

[00:27:23] owns real estate.

[00:27:24] So regardless of whether

[00:27:25] they tell you

[00:27:26] they like it or not,

[00:27:27] they all like

[00:27:27] bonus depreciation.

[00:27:28] And two,

[00:27:30] that bonus depreciation

[00:27:31] is also tied

[00:27:32] to the expiration

[00:27:33] of the child tax credits.

[00:27:35] And those child tax credits

[00:27:37] are,

[00:27:37] those two things

[00:27:37] are tied together.

[00:27:38] So the Democrats

[00:27:39] are going to say,

[00:27:39] hey,

[00:27:39] give us the child tax credit.

[00:27:41] We'll give you

[00:27:42] the bonus depreciation.

[00:27:43] Let's get this thing passed.

[00:27:45] And so my guess is

[00:27:46] that both of those

[00:27:47] will get passed.

[00:27:49] If that does happen,

[00:27:50] I think that the 100% bonus

[00:27:52] will get passed

[00:27:53] through 2026.

[00:27:54] Well, you heard it.

[00:27:55] You heard it here first.

[00:27:56] That was a really good explanation

[00:27:57] because we were tracking that bill.

[00:27:59] That actually held up

[00:28:00] some of our K-1s

[00:28:01] because operators were saying,

[00:28:03] hey,

[00:28:03] we don't want to have

[00:28:04] to redo everything.

[00:28:04] We're just going to delay

[00:28:06] a couple of months

[00:28:07] until this bill passes.

[00:28:08] It's going to be great.

[00:28:09] There's going to be

[00:28:09] 100% bonus depreciation again.

[00:28:11] And nope.

[00:28:12] Yeah,

[00:28:12] we were hoping it would pass.

[00:28:14] It's interesting the way

[00:28:14] they pass these tax laws

[00:28:15] because remember,

[00:28:17] tax filing for next year

[00:28:18] starts in February.

[00:28:19] And so the tax software companies

[00:28:21] need time to get this,

[00:28:22] these updates

[00:28:23] into their software.

[00:28:24] So my guess is January,

[00:28:26] they'll put together the bill.

[00:28:27] They'll have it passed

[00:28:28] by early February.

[00:28:29] That gives them time

[00:28:30] to update the software.

[00:28:32] So by the time we start

[00:28:32] doing our taxes next year,

[00:28:34] I'm hoping that we'll have

[00:28:35] 100% bonus.

[00:28:36] But hell,

[00:28:37] even 60% bonus is,

[00:28:39] we were doing cost egg.

[00:28:40] Remember,

[00:28:41] cost egg and bonus

[00:28:42] are separate,

[00:28:42] like Ryan stated.

[00:28:43] Right.

[00:28:44] It's way better

[00:28:44] to depreciate something

[00:28:45] over five years

[00:28:46] versus 39 years.

[00:28:48] But when you add bonus,

[00:28:50] that five-year stuff

[00:28:50] gets a 60% bump,

[00:28:52] an 80% bump,

[00:28:53] in some cases,

[00:28:54] 100% bump,

[00:28:55] it just puts it on steroids

[00:28:57] and makes it even more impactful.

[00:28:59] Yeah,

[00:28:59] I always say bonus depreciation

[00:29:00] is the gasoline on the fire.

[00:29:01] I mean,

[00:29:02] it's like,

[00:29:02] yeah,

[00:29:03] cost segregation

[00:29:04] is already a good idea.

[00:29:05] It's going to accelerate,

[00:29:06] you know,

[00:29:07] over the next five years,

[00:29:08] over the next seven years,

[00:29:09] over the next 15 years,

[00:29:10] you're going to be taking

[00:29:11] more depreciation

[00:29:12] every year on your assets.

[00:29:13] But you throw bonus depreciation

[00:29:15] in there

[00:29:16] and it's just like,

[00:29:17] boom,

[00:29:17] you know,

[00:29:18] that year one

[00:29:18] is just so good.

[00:29:20] And just to clarify,

[00:29:21] if it doesn't pass 2026,

[00:29:24] it'll go to 20%

[00:29:25] and then it's gone in 27.

[00:29:27] We'll be at 0% bonus.

[00:29:28] Yeah,

[00:29:29] phases out completely in 27.

[00:29:30] So 20% each year.

[00:29:32] So now,

[00:29:33] let's talk about

[00:29:34] the retroactive stuff

[00:29:35] because we touched on it

[00:29:36] very,

[00:29:36] very briefly

[00:29:37] right there in your example.

[00:29:39] But if I own a rental property

[00:29:41] that I bought,

[00:29:43] let's say,

[00:29:44] in 2018

[00:29:46] and I had no idea

[00:29:47] about bonus depreciation,

[00:29:49] I had no idea

[00:29:50] what was in the

[00:29:50] Tax Cuts and Jobs Act,

[00:29:52] I got a little surprise

[00:29:53] coming my way,

[00:29:54] right?

[00:29:55] Yeah,

[00:29:55] well,

[00:29:55] Eric gave us a window.

[00:29:56] What was the window?

[00:29:57] So you bought it

[00:29:58] between 927 of 17

[00:30:00] and 1231 of 2022.

[00:30:03] 17 until the very end

[00:30:05] allowed day of 2022.

[00:30:06] If you're in that window,

[00:30:08] this applies to you.

[00:30:09] Pay attention.

[00:30:09] Yeah.

[00:30:09] Ding,

[00:30:10] ding,

[00:30:10] ding.

[00:30:11] Go for it.

[00:30:11] Yeah,

[00:30:12] sorry,

[00:30:12] you were saying,

[00:30:12] I bought that rental.

[00:30:14] No,

[00:30:14] that was great.

[00:30:14] So it's based on the date

[00:30:15] it's purchased

[00:30:16] and put in service,

[00:30:17] right?

[00:30:18] Yeah,

[00:30:18] it's based on the date

[00:30:19] that it goes in service.

[00:30:20] So let's say you bought

[00:30:21] something in 19,

[00:30:22] didn't do a cost seg study,

[00:30:24] you've been taking

[00:30:24] your standard deduction

[00:30:25] for the last four or five years,

[00:30:28] you can actually do

[00:30:28] cost segregation

[00:30:29] on your 2024 tax return,

[00:30:32] take all that

[00:30:32] missed depreciation

[00:30:34] that you could have got

[00:30:34] over the last four

[00:30:35] or five years

[00:30:36] and drop it

[00:30:36] on your current return.

[00:30:38] Bam.

[00:30:38] It does require

[00:30:39] an additional form.

[00:30:40] It's called a 315.

[00:30:42] It's interesting.

[00:30:42] It's called

[00:30:43] a change in accounting method,

[00:30:44] but you're telling the IRS,

[00:30:45] hey,

[00:30:45] I'm changing the way

[00:30:46] I'm accounting

[00:30:46] for my property.

[00:30:47] Instead of using

[00:30:48] straight line depreciation,

[00:30:50] I'm using

[00:30:51] accelerated depreciation

[00:30:52] and you actually

[00:30:53] check a box

[00:30:54] on that form

[00:30:55] that says

[00:30:55] I'm going

[00:30:55] from an impermissible

[00:30:57] method of depreciation

[00:30:58] to a permissible method

[00:31:00] like you were going

[00:31:00] to take.

[00:31:01] You're doing it wrong.

[00:31:02] You're telling the IRS,

[00:31:03] hey,

[00:31:04] I depreciated my carpet

[00:31:05] wrong.

[00:31:05] I was depreciating

[00:31:06] my carpet

[00:31:06] over 39 years.

[00:31:08] I should have

[00:31:08] depreciated over five

[00:31:09] and here's the difference

[00:31:11] in that number

[00:31:11] and the nice thing

[00:31:13] is you don't have

[00:31:13] to go back

[00:31:14] and amend

[00:31:14] any tax returns.

[00:31:16] You get to take

[00:31:16] that deduction

[00:31:17] in the current year,

[00:31:18] which is great,

[00:31:19] without amending.

[00:31:20] And what's so cool

[00:31:21] is because the property

[00:31:22] was placed into service

[00:31:23] within that 100%

[00:31:24] bonus window,

[00:31:25] you talk to Eric,

[00:31:26] you get your

[00:31:26] cost segregation

[00:31:27] study done

[00:31:27] and it's applicable

[00:31:28] for 100%

[00:31:30] bonus depreciation

[00:31:30] even though

[00:31:31] the current year,

[00:31:32] we're recording

[00:31:33] this in 2024,

[00:31:35] we are at 60%.

[00:31:36] Correct.

[00:31:37] If you were placed

[00:31:38] a property in service

[00:31:39] today or sometime

[00:31:40] in this calendar year,

[00:31:42] that cost segregation

[00:31:43] study would only be

[00:31:44] eligible for 60%

[00:31:46] bonus depreciation

[00:31:47] because you placed

[00:31:48] your property in service

[00:31:49] somewhere between

[00:31:49] September 27th,

[00:31:51] 2017

[00:31:51] and New Year's Eve

[00:31:54] of 22.

[00:31:55] You get to take

[00:31:56] the entire value

[00:31:57] of that dollar amount

[00:31:58] that comes out

[00:31:59] on that

[00:31:59] cost segregation study.

[00:32:01] Yeah,

[00:32:01] and just to kind of

[00:32:02] make this,

[00:32:03] this is tying the question

[00:32:04] to the scenario

[00:32:05] we're talking about

[00:32:06] in our Passive Income

[00:32:08] Pilots Facebook page.

[00:32:10] If you're not part of this,

[00:32:11] you can join

[00:32:11] Passive Income Pilots,

[00:32:13] fill out some information,

[00:32:14] you get into the

[00:32:14] private group.

[00:32:15] There was a question

[00:32:17] on October 1st

[00:32:18] from Carlos,

[00:32:18] he asked,

[00:32:19] bonus depreciation

[00:32:20] scenario question.

[00:32:21] If I buy a property,

[00:32:22] live in it for a little while

[00:32:23] and then fast forward

[00:32:25] a year or so

[00:32:26] and now move

[00:32:28] and that said property

[00:32:29] gets converted

[00:32:30] to a STR,

[00:32:31] short-term rental,

[00:32:32] can you bonus depreciate

[00:32:34] the short-term rental

[00:32:35] against your own income

[00:32:37] if you're actively

[00:32:38] managing it

[00:32:39] even though you

[00:32:40] purchased the home

[00:32:41] the previous year

[00:32:42] as a primary residence?

[00:32:44] So basically,

[00:32:45] taking a primary,

[00:32:46] flipping it to a short-term rental

[00:32:47] and applying bonus.

[00:32:49] As long as that primary

[00:32:50] was bought

[00:32:51] during a bonus period.

[00:32:52] So yes,

[00:32:52] in that case,

[00:32:53] yes, he could.

[00:32:54] Had he bought that property

[00:32:55] prior to September 27th,

[00:32:58] then no,

[00:32:59] you wouldn't be able

[00:32:59] to take bonus on that.

[00:33:01] But you could still

[00:33:01] cost seg it.

[00:33:02] You could still cost seg it,

[00:33:03] yeah.

[00:33:04] We'd still recommend

[00:33:04] cost segging it,

[00:33:06] but you wouldn't

[00:33:06] be eligible for a bonus.

[00:33:08] So there are some

[00:33:09] unique laws

[00:33:10] around having stuff

[00:33:12] as a primary residence.

[00:33:13] So definitely check

[00:33:13] with your tax preparer first.

[00:33:15] But yes,

[00:33:16] in most cases,

[00:33:17] you can apply

[00:33:17] bonus depreciation.

[00:33:19] So Carlos,

[00:33:20] if you're listening to this,

[00:33:21] thanks for asking

[00:33:22] the question

[00:33:23] and get in touch

[00:33:24] with Eric.

[00:33:25] Yes.

[00:33:25] He probably has

[00:33:26] some good news for you.

[00:33:27] Yeah.

[00:33:28] I have a couple

[00:33:29] other questions

[00:33:30] from the forum

[00:33:31] and maybe we just go ahead

[00:33:32] and just ask a couple

[00:33:33] of these questions

[00:33:34] and just make sure

[00:33:35] that we're nailing this down.

[00:33:36] How is in-service

[00:33:38] defined by the IRS?

[00:33:40] Does it have to be listed

[00:33:41] on Airbnb or VRBO?

[00:33:43] I'm considering

[00:33:44] putting the property

[00:33:45] into service

[00:33:46] for a short time

[00:33:47] to realize

[00:33:47] accelerated depreciation

[00:33:48] prior to the renovation

[00:33:50] and cost seg.

[00:33:51] That's a good question.

[00:33:52] So the definition

[00:33:53] the IRS puts forth

[00:33:54] is available

[00:33:56] for its intended

[00:33:57] use or purpose.

[00:33:58] Now,

[00:33:59] I've seen

[00:33:59] that interpreted

[00:34:00] by 50 different CPAs

[00:34:02] 50 different ways.

[00:34:03] Some people will say

[00:34:04] the day you close on it,

[00:34:07] it's available

[00:34:07] for its intended

[00:34:08] use or purpose.

[00:34:09] Some people will say

[00:34:10] the day you rent it out,

[00:34:11] it's available.

[00:34:12] I've heard people say

[00:34:13] the day you list it.

[00:34:14] So I always,

[00:34:16] my recommendation

[00:34:17] would be

[00:34:17] if you buy

[00:34:18] an old dilapidated property

[00:34:20] that you can't rent

[00:34:21] in its current condition,

[00:34:22] then its in-service date

[00:34:24] is not the day

[00:34:24] you buy it.

[00:34:25] It's the day

[00:34:26] that you finish

[00:34:27] your renovations

[00:34:28] and it's available

[00:34:28] to be rented.

[00:34:30] I don't necessarily

[00:34:31] think that it has

[00:34:32] to be on VRBO.

[00:34:33] I just think

[00:34:34] that if you've got pictures

[00:34:35] and you can show

[00:34:36] that that property

[00:34:37] was in that condition

[00:34:38] on that date,

[00:34:39] it was available,

[00:34:40] then I think

[00:34:41] that you're good to go.

[00:34:42] You build a much

[00:34:43] stronger case,

[00:34:44] obviously,

[00:34:44] if you have it listed.

[00:34:45] You build even

[00:34:46] a stronger case

[00:34:47] if you've got some money

[00:34:48] coming in off of it.

[00:34:49] You can obviously

[00:34:49] easily show

[00:34:50] that it's in service.

[00:34:51] But when you get down

[00:34:53] to the end of the year,

[00:34:54] you know,

[00:34:55] in the example I use,

[00:34:56] I bought my property

[00:34:57] in November

[00:34:57] by the time

[00:34:58] we got it set up.

[00:34:59] I only had three renters

[00:35:00] or three short-term stays

[00:35:01] in there

[00:35:02] by the time we got it

[00:35:03] set it up

[00:35:03] through the end of the year.

[00:35:04] But I listed it

[00:35:06] as in service

[00:35:06] because I was using it

[00:35:07] for its intended use

[00:35:08] or purpose.

[00:35:09] And so,

[00:35:09] I don't think

[00:35:10] there's a certain amount

[00:35:11] of time you have

[00:35:12] to have

[00:35:12] or a certain amount

[00:35:13] of renters,

[00:35:13] but you definitely

[00:35:14] want to document it,

[00:35:15] have pictures.

[00:35:16] If you've got a listing,

[00:35:17] that just makes

[00:35:18] your case that much stronger.

[00:35:20] So from my experience,

[00:35:22] and I've explored

[00:35:23] this a lot,

[00:35:24] technically,

[00:35:25] it's,

[00:35:26] from everything

[00:35:27] that I've gathered,

[00:35:28] it's that it's

[00:35:28] advertised for years.

[00:35:30] So if it's listed

[00:35:31] on Airbnb,

[00:35:32] now,

[00:35:32] pro tip,

[00:35:34] take a screenshot.

[00:35:35] Got some feedback

[00:35:36] from episode 77.

[00:35:37] We're going to be posting

[00:35:38] this in the Facebook group.

[00:35:40] Some really wise things

[00:35:41] that someone learned

[00:35:42] during a tax audit.

[00:35:43] They had listed

[00:35:44] a property,

[00:35:45] but they never took

[00:35:47] a screenshot

[00:35:47] of their Craigslist ad.

[00:35:48] So because somebody

[00:35:49] didn't actually rent it

[00:35:51] in that calendar year,

[00:35:52] but it was listed,

[00:35:53] had they had a screenshot

[00:35:55] of the advertisement

[00:35:56] that they had posted,

[00:35:57] the IRS would have

[00:35:58] allowed the deduction.

[00:35:59] And the following question

[00:36:01] Joshua also had

[00:36:03] on the forum was,

[00:36:05] can my LLC

[00:36:07] rent the property

[00:36:09] to my family

[00:36:10] at fair market value

[00:36:11] trying to stay

[00:36:13] under the seven-day

[00:36:14] STR loophole

[00:36:15] in 2024?

[00:36:15] So can they run it,

[00:36:17] they can run it out

[00:36:18] effectively to anybody,

[00:36:19] right Eric?

[00:36:20] Yeah,

[00:36:20] I don't want to

[00:36:22] misspeak on that

[00:36:23] because I don't know

[00:36:23] for sure.

[00:36:24] Check with your tax preparer.

[00:36:25] That's my hand answer,

[00:36:27] but I don't see

[00:36:28] why that would be a problem.

[00:36:29] I mean,

[00:36:30] how do I say this

[00:36:31] without saying it?

[00:36:32] I don't know

[00:36:33] how the IRS

[00:36:33] keeps track

[00:36:34] of how many days

[00:36:35] you're using it personally.

[00:36:36] Or it sounds like

[00:36:37] he's renting it out.

[00:36:38] He's renting it out

[00:36:39] to his family.

[00:36:40] And in that case,

[00:36:41] you're right.

[00:36:41] He's actually paying rent.

[00:36:42] He's paying himself rent.

[00:36:43] So I don't see it

[00:36:45] as a problem.

[00:36:46] I think where you become

[00:36:47] a problem

[00:36:48] is where you call it

[00:36:49] a short-term rental

[00:36:50] and you've got two people

[00:36:51] staying in it

[00:36:52] all year long.

[00:36:53] Yeah.

[00:36:54] And then you're using it,

[00:36:55] you're staying there

[00:36:56] all summer

[00:36:56] and going to the lake

[00:36:57] all summer.

[00:36:58] That's hard to justify.

[00:36:59] And so I think

[00:37:00] that's where you become

[00:37:01] a problem.

[00:37:02] But the technical,

[00:37:04] you're not supposed

[00:37:05] to use it for more

[00:37:05] than 14 days

[00:37:06] of personal use.

[00:37:07] Otherwise,

[00:37:08] it becomes a second residence

[00:37:09] and not an investment property.

[00:37:11] But again,

[00:37:12] I think that's tough

[00:37:13] for the IRS

[00:37:14] to prove how often

[00:37:15] it's being used.

[00:37:15] As long as you've got

[00:37:16] income coming in

[00:37:18] from the property

[00:37:18] throughout the year,

[00:37:20] in most cases,

[00:37:21] you're pretty safe.

[00:37:22] Yeah.

[00:37:22] And in episode 77,

[00:37:24] we talked to Luke Lyson,

[00:37:25] who is in the aircraft

[00:37:27] leaseback space.

[00:37:29] And one thing

[00:37:30] that he said is,

[00:37:31] you know,

[00:37:31] the rental goes

[00:37:32] into an LLC.

[00:37:34] And the LLC,

[00:37:35] if you want to actually

[00:37:36] rent your own airplane,

[00:37:37] for example,

[00:37:37] you would have to just

[00:37:38] rent it just like

[00:37:39] anybody would

[00:37:40] from your LLC

[00:37:41] as an individual

[00:37:41] to the LLC.

[00:37:42] So I think

[00:37:43] I would imagine

[00:37:44] that applies the same.

[00:37:45] And again,

[00:37:46] it's always worth checking

[00:37:47] with your tax

[00:37:48] and legal professional

[00:37:49] on this kind of stuff.

[00:37:50] Don't, you know,

[00:37:50] do your own due diligence here.

[00:37:52] Yeah.

[00:37:52] I would think

[00:37:52] that the answer

[00:37:53] that you're gaining

[00:37:55] from that question

[00:37:57] should be coming

[00:37:57] from the guy

[00:37:59] or gal

[00:37:59] that's going to go

[00:38:00] into a food fight

[00:38:01] with the IRS

[00:38:02] during the audit.

[00:38:03] Yes.

[00:38:03] They're the ones,

[00:38:04] that's why I would say

[00:38:04] whoever's signing your return,

[00:38:06] make sure they're okay with it

[00:38:07] because they're the ones

[00:38:08] that are going to defend you.

[00:38:09] Yeah.

[00:38:09] Yeah.

[00:38:09] Great advice.

[00:38:10] So the other question

[00:38:11] we have from the forum,

[00:38:12] we're kind of cleaning up here

[00:38:13] and Joshua,

[00:38:14] thank you for asking

[00:38:14] your question.

[00:38:16] In episode 44,

[00:38:17] Tate mentioned

[00:38:17] a cost segregation study

[00:38:18] for depreciation.

[00:38:19] He also mentioned

[00:38:20] that he had actively

[00:38:21] managed the STR property

[00:38:23] for the year

[00:38:24] to realize

[00:38:25] its full potential.

[00:38:26] Is it,

[00:38:27] is that calendar year?

[00:38:29] Or if they buy it

[00:38:30] late in 2024,

[00:38:32] do they just need

[00:38:33] to actively manage

[00:38:34] the property

[00:38:35] inside of

[00:38:36] December 31st,

[00:38:38] 2024

[00:38:39] and then hire somebody else

[00:38:40] potentially in 2025?

[00:38:42] How is that,

[00:38:42] how does that look at?

[00:38:43] Yeah.

[00:38:44] So again,

[00:38:44] it's going to come down

[00:38:45] to intent.

[00:38:46] If you were to buy

[00:38:47] and close out the,

[00:38:48] you know,

[00:38:49] on the 30th,

[00:38:50] you get a renter

[00:38:50] in there on the 31st,

[00:38:52] you say you managed it

[00:38:53] for two days

[00:38:54] and then you kicked it

[00:38:54] over to a management company,

[00:38:56] that's going to be tough

[00:38:57] to defend to the IRS.

[00:38:59] I,

[00:38:59] I personally bought

[00:39:01] and managed my property

[00:39:02] for three months.

[00:39:03] I bought it in October,

[00:39:05] managed it before I turned it over

[00:39:06] to the management company

[00:39:07] and I think that's justified.

[00:39:09] I had time this year.

[00:39:10] I thought I was going to be able

[00:39:11] to manage it.

[00:39:12] It was a lot harder

[00:39:12] than I thought.

[00:39:13] So for 2023,

[00:39:14] we decided to get

[00:39:16] a management company.

[00:39:17] I think that's,

[00:39:18] but it's just in the,

[00:39:19] technically it's just

[00:39:20] in the tax year.

[00:39:21] You have to manage it

[00:39:22] in that tax year

[00:39:23] because if you're managing

[00:39:24] it in that tax year,

[00:39:26] when you do those taxes,

[00:39:27] those deductions become

[00:39:29] active for that tax year.

[00:39:31] So it's not a calendar year.

[00:39:32] You don't have to do it

[00:39:33] for a full 12 months,

[00:39:34] but you just have to do it

[00:39:35] in that tax year.

[00:39:36] And for us,

[00:39:37] you know,

[00:39:38] we bought in October as well,

[00:39:39] but it took us until

[00:39:40] after Christmas

[00:39:41] to get the first renter

[00:39:42] in there because it took

[00:39:42] that long to get the furniture.

[00:39:44] And I mean,

[00:39:44] it was a big house.

[00:39:45] We had to deck

[00:39:46] the whole thing out

[00:39:47] for, to get it ready

[00:39:48] to be rented.

[00:39:48] So, and keep in mind,

[00:39:50] you got to spend

[00:39:50] that a hundred hours.

[00:39:51] So it's hard to spend

[00:39:52] a hundred hours in two days.

[00:39:55] Actually, I think it's,

[00:39:56] if my math is correct,

[00:39:57] it's technically impossible

[00:39:58] to do a hundred hours.

[00:39:59] I think it's technically

[00:40:00] impossible.

[00:40:01] Yes.

[00:40:01] Eric, this might not be

[00:40:02] a question that you know

[00:40:03] the answer to,

[00:40:04] so we'll let you

[00:40:05] off the hook here,

[00:40:05] but someone's asking

[00:40:06] like what kind of expense

[00:40:08] should somebody,

[00:40:09] I mean,

[00:40:10] you talked about how much

[00:40:11] the cost tax study

[00:40:11] costs, right?

[00:40:12] Sure.

[00:40:13] It depends on how big

[00:40:14] the house is in your scenario,

[00:40:15] but you gave us a range.

[00:40:16] So thank you for that.

[00:40:17] And we won't hold you to it.

[00:40:18] But what about

[00:40:19] preparing taxes?

[00:40:21] If you're doing this type

[00:40:22] of cost segregation study,

[00:40:23] is this something

[00:40:24] you can do in TurboTax?

[00:40:25] Or is this something

[00:40:26] that you're paying

[00:40:27] a big fancy CPA for

[00:40:28] and there's more

[00:40:30] kind of hidden cost

[00:40:32] to doing this, right?

[00:40:33] You're going to have to pay,

[00:40:34] you know,

[00:40:34] now a more advanced CPA.

[00:40:36] They're going to charge

[00:40:36] you for this work.

[00:40:37] You know,

[00:40:37] how does that kind of

[00:40:38] connectivity work

[00:40:39] between this type

[00:40:41] of transaction?

[00:40:42] No, that's a great question

[00:40:43] because we see

[00:40:44] the whole gamut.

[00:40:45] We work with people,

[00:40:46] we do cost-sake studies,

[00:40:47] and then I get a call.

[00:40:48] Actually, today,

[00:40:49] today we're recording this

[00:40:49] on October 15th,

[00:40:51] which is the tax filing.

[00:40:52] I've got my phone on silent,

[00:40:54] but I'm sure I'm going

[00:40:54] to have messages of,

[00:40:55] hey, I did this cost-sake study.

[00:40:56] How the hell do I enter

[00:40:57] this into TurboTax?

[00:40:59] So that's a great question.

[00:41:01] So you don't have

[00:41:02] to have a fancy CPA

[00:41:04] to be able to take advantage

[00:41:05] of cost segregation.

[00:41:07] I will tell you this

[00:41:08] from personal experience,

[00:41:09] and I will tell you this

[00:41:10] from working in this industry.

[00:41:12] People leave a lot

[00:41:14] of money on the table

[00:41:15] by trying to skip over

[00:41:17] that step of hiring a CPA.

[00:41:19] And I'm not just saying this

[00:41:20] because I've got a lot

[00:41:21] of CPA friends

[00:41:21] in the industry.

[00:41:22] I'm saying this

[00:41:23] because I've seen it happen

[00:41:24] way too often.

[00:41:25] So yes,

[00:41:26] if you take your cost,

[00:41:28] if you take the study

[00:41:28] that we provide

[00:41:29] and you go into Walmart

[00:41:30] to H&R Block

[00:41:31] and you hand them the study,

[00:41:32] they're not going to know

[00:41:32] what the hell to do with it.

[00:41:33] And you're going to have

[00:41:34] to call us

[00:41:35] and we'll walk them through

[00:41:36] and we're happy to do that

[00:41:37] and we can make it happen.

[00:41:38] But there is a huge difference,

[00:41:40] Ryan and Tate,

[00:41:41] between a tax preparer

[00:41:43] and a tax strategist.

[00:41:45] A tax preparer

[00:41:46] takes your facts,

[00:41:47] they take your W-2,

[00:41:49] your forms,

[00:41:50] they run them

[00:41:50] through their system

[00:41:51] and it spits out a number.

[00:41:52] And they say,

[00:41:53] this is how much you owe

[00:41:54] or this is how much

[00:41:54] you're getting back.

[00:41:55] A tax strategist

[00:41:56] will sit down and say,

[00:41:57] hey, have you done

[00:41:58] a cost seg study?

[00:41:59] Have you done the hours?

[00:42:01] Have you documented

[00:42:02] your hours

[00:42:03] so that if this ever

[00:42:03] gets audited,

[00:42:04] which the chances

[00:42:05] of it getting audited

[00:42:06] are very slim,

[00:42:06] but we want to make sure

[00:42:08] we're covering all

[00:42:08] of our bases there

[00:42:09] and they will find

[00:42:10] deductions for you

[00:42:12] and it does cost money.

[00:42:13] But I'll tell you what,

[00:42:14] if I've seen,

[00:42:16] we have people call us

[00:42:17] all the time

[00:42:17] who are like,

[00:42:17] hey, I just heard you,

[00:42:18] I just heard about you,

[00:42:19] Eric, on a podcast.

[00:42:21] I just heard about

[00:42:22] costing on a podcast.

[00:42:23] I just filed my 2023 taxes.

[00:42:25] I just wrote a check

[00:42:26] for 80 grand,

[00:42:27] but I've got these

[00:42:28] seven properties

[00:42:28] I've owned

[00:42:29] for the last four years.

[00:42:30] Can we do something?

[00:42:31] And had they been working

[00:42:33] with a CPA

[00:42:34] who understands real estate,

[00:42:35] who understands

[00:42:37] investment properties,

[00:42:38] they would have already

[00:42:39] been doing that.

[00:42:40] And so yeah,

[00:42:41] it would have cost them,

[00:42:42] it's not going to cost them

[00:42:43] $195 like it does

[00:42:44] at H&R Block

[00:42:45] to file their tax return.

[00:42:46] It might cost them

[00:42:47] five or 600,

[00:42:48] maybe even $1,000

[00:42:49] to get their taxes done.

[00:42:51] But in that scenario

[00:42:53] where they paid

[00:42:53] $80,000 to the IRS

[00:42:55] and we were able

[00:42:55] to get them

[00:42:56] all of that money back,

[00:43:00] compared to what

[00:43:00] the potential savings

[00:43:02] would be.

[00:43:02] So I don't have

[00:43:03] an exact answer, Ryan,

[00:43:04] on what you should be paying

[00:43:05] to get your taxes done.

[00:43:07] But as you build

[00:43:08] a portfolio of properties,

[00:43:10] even if it's one property,

[00:43:11] and I will say

[00:43:12] for most of your listeners,

[00:43:13] if they're doing

[00:43:14] one short-term rental property

[00:43:16] and they're trying

[00:43:16] to take advantage

[00:43:17] of this short-term

[00:43:18] rental loophole,

[00:43:19] there is a lot

[00:43:20] that goes into that

[00:43:21] that your typical

[00:43:22] tax preparer

[00:43:23] is not going to know.

[00:43:25] They got to make sure

[00:43:26] it's set up correctly.

[00:43:27] They got to make sure

[00:43:27] it's documented correctly.

[00:43:28] They got to make sure

[00:43:29] that these numbers

[00:43:30] are showing up

[00:43:30] on the right schedules.

[00:43:32] And so one little mistake

[00:43:33] could get all of this

[00:43:34] thrown out.

[00:43:35] And so I would say,

[00:43:36] you know,

[00:43:37] if you inherit a property,

[00:43:39] your parents pass away,

[00:43:40] you inherit one single property,

[00:43:42] you're probably okay

[00:43:43] doing your own taxes.

[00:43:44] But as you start

[00:43:44] to get into

[00:43:44] some of these more,

[00:43:46] I don't want to call

[00:43:47] them complicated

[00:43:47] because I think

[00:43:48] that scares people away.

[00:43:49] They're not that complicated.

[00:43:50] You just have to have

[00:43:50] the right team around you.

[00:43:52] But as you start

[00:43:52] to get into some more

[00:43:54] of these tax strategy

[00:43:56] type situations,

[00:43:57] you've got to have somebody

[00:43:59] who understands real estate.

[00:44:00] And so there's a lot

[00:44:01] of good CPAs out there

[00:44:02] who are real estate focused

[00:44:04] and it makes all the difference

[00:44:06] in the world.

[00:44:07] And they're worth every dollar.

[00:44:08] They're going to charge you

[00:44:08] a little bit more,

[00:44:09] but I promise you

[00:44:10] it's worth every dollar.

[00:44:11] And you don't have to go far

[00:44:12] to look for that.

[00:44:13] You can go right into

[00:44:14] the Passive Income Pilots

[00:44:15] Rolodex,

[00:44:16] go back to episode 75,

[00:44:19] Unlocking Tax Savings,

[00:44:20] Real Estate Strategies

[00:44:21] for High Income Pilots.

[00:44:22] And we interview a CPA

[00:44:24] that is familiar

[00:44:25] with this strategy

[00:44:26] and who has been

[00:44:28] vetted by us

[00:44:29] and is actually,

[00:44:31] I think,

[00:44:31] we give a little discount

[00:44:32] or whatever

[00:44:33] if you say you're

[00:44:34] from Passive Income Pilots.

[00:44:35] So you have these people

[00:44:37] in your Rolodex now

[00:44:39] as a listener, right?

[00:44:40] You can go to Eric

[00:44:41] for your cost side.

[00:44:42] You can go to episode 75

[00:44:44] and learn from Brandon Hall

[00:44:46] and Hall CPA,

[00:44:47] the Real Estate CPA,

[00:44:48] talk about this tax savings.

[00:44:50] All these things

[00:44:51] are available.

[00:44:51] This is why we have this show

[00:44:53] so that you guys

[00:44:53] don't have to go

[00:44:54] finding the right,

[00:44:56] you know,

[00:44:56] we've already met

[00:44:57] all these people

[00:44:58] and done all these things

[00:44:59] and worked in the industry,

[00:45:00] right?

[00:45:01] And so we're just connecting

[00:45:03] our listeners

[00:45:03] to the right people

[00:45:05] to help have a great,

[00:45:06] you know,

[00:45:06] tax, legal,

[00:45:07] and investing,

[00:45:08] you know,

[00:45:08] framework.

[00:45:10] So...

[00:45:10] Yeah.

[00:45:10] Have a good bench.

[00:45:11] You got to have a good bench.

[00:45:12] So when we always say,

[00:45:13] oh, check with your CPA,

[00:45:14] tax advisor,

[00:45:15] you know,

[00:45:15] blah, blah, blah, blah, blah.

[00:45:16] We are bringing on those people

[00:45:18] and, you know,

[00:45:18] you can do your due diligence

[00:45:19] on them

[00:45:20] and you can decide

[00:45:21] who you want to use,

[00:45:21] but we try to bring

[00:45:23] those types of people

[00:45:23] to the forefront

[00:45:24] so you can actually

[00:45:25] build your team

[00:45:26] and have these folks

[00:45:27] to go to when you need to.

[00:45:28] So...

[00:45:29] Absolutely.

[00:45:29] Yeah, I can tell you

[00:45:30] I pay a lot more

[00:45:31] than $1,000 a year

[00:45:32] to file my tax.

[00:45:32] Yes, me too.

[00:45:33] That pays too.

[00:45:34] $1,000 sounds really nice.

[00:45:36] Yeah, that sounds really nice.

[00:45:37] But hey,

[00:45:37] if it costs you $10,000

[00:45:38] and it saves you

[00:45:41] $10,001 from the IRS,

[00:45:43] that service was free.

[00:45:44] Exactly.

[00:45:45] That's the way I look at it

[00:45:46] and it's, you know,

[00:45:47] it's usually not that close.

[00:45:49] Yeah.

[00:45:49] It's wildly in the other direction.

[00:45:52] Absolutely.

[00:45:52] So Eric,

[00:45:53] I really appreciate you

[00:45:54] coming on the show.

[00:45:55] How can listeners

[00:45:55] get in touch with you

[00:45:56] to take the next steps

[00:45:57] on a potential cost study?

[00:45:59] You know,

[00:45:59] that's a great question.

[00:46:00] So I think we talked

[00:46:02] about earlier, Ryan,

[00:46:02] we've got the link.

[00:46:03] If you want to put that link

[00:46:04] in the show notes,

[00:46:05] listeners,

[00:46:06] if you guys click on that link,

[00:46:07] we'll do a free benefit analysis

[00:46:09] for any of the listeners.

[00:46:10] If you've got properties

[00:46:11] and you're paying taxes,

[00:46:13] it doesn't hurt

[00:46:14] to get the benefit analysis run.

[00:46:17] It's no cost to you.

[00:46:18] We'll give you an idea

[00:46:19] conservatively

[00:46:19] of your tax savings

[00:46:20] as well as what our fee would be.

[00:46:22] And then we can get

[00:46:23] on the phone

[00:46:24] with your tax preparer

[00:46:25] or you can forward

[00:46:25] our information

[00:46:26] to your tax preparer

[00:46:27] and we want to confirm

[00:46:28] that it does

[00:46:29] or doesn't make sense.

[00:46:30] If you guys want to

[00:46:31] get a free benefit analysis,

[00:46:33] you can go to the link

[00:46:34] in the show notes.

[00:46:35] That link is just

[00:46:37] www.costsegauthority.com

[00:46:39] forward slash

[00:46:40] passive income pilots.

[00:46:42] If you click on that link,

[00:46:43] again, it'll be

[00:46:44] in the show notes.

[00:46:44] We'll give that free

[00:46:45] benefit analysis

[00:46:46] so that you guys

[00:46:46] can get an idea

[00:46:47] of which of your properties

[00:46:48] are good candidates,

[00:46:49] which ones may not

[00:46:50] be good candidates,

[00:46:51] but at least you'll

[00:46:52] have the information

[00:46:52] to see if there's

[00:46:53] some potential tax savings

[00:46:54] that you might be

[00:46:55] leaving on the table.

[00:46:56] And if you're looking

[00:46:56] for an Airbnb this year

[00:46:58] and you want to send

[00:47:00] the Zillow link over,

[00:47:02] I'm sure you can take

[00:47:02] a look at that as well.

[00:47:03] You can look at what

[00:47:04] the benefit would be.

[00:47:04] Honestly, this is the

[00:47:05] most no-brainer tax

[00:47:07] strategy.

[00:47:08] I mean, if you're going

[00:47:09] to buy property,

[00:47:10] you might as well.

[00:47:11] And maybe Eric could

[00:47:13] offer you something like,

[00:47:15] hey, why don't you just

[00:47:16] do this little tweak

[00:47:16] and then you can take

[00:47:17] the depreciation, right?

[00:47:18] So yeah, no,

[00:47:19] we're happy to control

[00:47:20] any way we can.

[00:47:21] Yeah.

[00:47:21] I mean, if you're

[00:47:22] listening to the show

[00:47:22] and you want to buy

[00:47:24] property, I mean,

[00:47:24] think about it.

[00:47:25] You want to get a

[00:47:26] preliminary on your title.

[00:47:27] You want to get an

[00:47:28] insurance quote.

[00:47:29] You want to get a

[00:47:30] cost seg study quote.

[00:47:31] You want to get all

[00:47:32] these things kind of

[00:47:33] lined up so that you

[00:47:34] can pencil what this

[00:47:35] property is really

[00:47:36] going to do for you

[00:47:36] overall holistically,

[00:47:38] right?

[00:47:38] So, you know,

[00:47:39] take the time to do

[00:47:40] a free consultation.

[00:47:41] It's really,

[00:47:42] it's no sweat,

[00:47:42] right?

[00:47:43] And if you put a

[00:47:44] property in service

[00:47:44] between 17 and 22,

[00:47:46] congratulations.

[00:47:47] Yeah, go back.

[00:47:47] You just found a

[00:47:48] little gem here.

[00:47:49] So Eric can hook

[00:47:50] you up with that as well.

[00:47:51] Well, everybody,

[00:47:52] that's all the time

[00:47:52] we have for today.

[00:47:53] Thanks for listening.

[00:47:54] Catch you on the next

[00:47:54] show.