One-Minute Tax Update: Real Estate Expensing, Write-offs CARES Act, and More


Hi, this Julio Gonzales with engineered Tax Services giving a One-Minute Tax Update. Listen, in the United States, one of the few investments that you get to expense is real estate. You can't expense stocks, you can't expense bonds, you know, you pay for those, you don't get to write them off. But when you buy real estate, you do get to expense it here in the United States. So, again, a true gift in the tax law that you can invest in a property that generates income appreciates, and ultimately you get to write off dollar for dollar. That's a great reason why real estate is so prominent in the United States. But let's get to cost segregation. I think people don't realize that even though you invest and get to expense real estate that expensing takes over 30 to 40 years depending on what kind of property you acquire. Now with the cost segregation study, the IRS allows an engineering an engineering report to determine what parts of the building exhaust much quicker which are non structural versus structural. And when we do that, we can write off 30 to 40% of the building up front. So let's do an example. You buy a million dollar building, we do a cost segregation study we determined 30% of it is non structural and easily exhaustible. So $300,000 is an immediate tax write off, that whole amount usually would be spread out over a few years, five years, seven years, but under our bonus rules, you can immediately expense that now that creates the $300,000 write off. Now that $300,000 write off may create a loss because now we have much more depreciation and write offs than we do income. Now in the cares act that we just passed. If you have a loss created on your income tax return, you can now go back, carry that loss back five years period when you did pay in taxes and get a refund. And also what we did in the CARES Act is allow me to expensing of qualified improvement property, which was typically 39 years. And those are just improvements to the basically leasehold improvements. So, those two things that pass in the CARES Act Three weeks ago, may cost segregation, tremendously important for any business owner that has real estate out there that's, you know, suffering in terms of cash. Here's a way now we can do the Cost Segregation Study, we'll qualify all the non structural assets, we'll get the qualified improvement property, we'll write all that off, we'll create a big loss and then we'll carry that back and get your refund. So that's an important thing now, if you have any questions, go to our website To find out more about that at our CARES Act page, and we'll continue to keep you updated on different tools you can use with Cost Segregation and other specially Tax Service products. To preserve your wealth, minimize minimize tax optimize your overall investment strategy. Thanks

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