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Build Wealth Using Real Estate

August 23, 20243 min read

I think I know you well enough by now that the whole purpose you're here is because…

 

You want to learn how to pay the least amount of taxes legally possible so you can gain financial freedom and build generational wealth!

 

If that's the case, I need to fill you in on one of my absolute favorite ways to take advantage of tax savings!

 

We're talking REAL ESTATE 🏠💰

 

If you want to lower your taxes and create generational wealth, you need to understand how beneficial owning real estate is…

 

The tax writes offs are incredible when you start thinking of your rental property as a small business. 

 

Strategies like involving family members as employees so you can travel together to check on your rentals or scout for other investment properties and be able to take those expenses as valid business deductions.

 

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Every week on my podcast, Life Changing Money, I interview very successful, wealthy people… I would honestly say 90% of them gained their wealth through real estate.

 

And most of them are not making millions on the cash flow, but instead they are leveraging smart and intentional tax strategies that are helping them build wealth.

I want to introduce you to one of the most powerful tools in the real estate investor's tax-saving arsenal: the cost segregation study.

What is a Cost Segregation Study?

Simply put, a cost segregation study is a strategic tax planning tool that allows real estate investors to accelerate the depreciation on certain components of their property.

Instead of depreciating the entire property over the standard 27.5 years (for residential) or 39 years (for commercial), a cost segregation study breaks down the property into its various components, such as fixtures, landscaping, plumbing, and more, which can be depreciated over shorter time frames—often 5, 7, or 15 years.

How Does This Translate to Tax Savings?

Here’s where the magic happens:

By accelerating depreciation, you can significantly increase your deductions in the early years of property ownership.

This means you'll reduce your taxable income, potentially saving you tens of thousands of dollars on your taxes. These savings can then be reinvested into more properties, fueling your real estate empire and fast-tracking your journey to financial freedom.

For example, imagine you purchased a rental property for $500,000. A traditional depreciation schedule would allow you to deduct roughly $18,182 per year. However, with a cost segregation study, you might be able to reclassify 20-30% of your property into shorter depreciation schedules. This could result in additional deductions of $30,000 to $50,000 in the first year alone!

Why Every Real Estate Investor Should Consider a Cost Segregation Study

The benefits of a cost segregation study extend far beyond just a larger deduction in the first year. By increasing your cash flow through tax savings, you're able to:

  • Reinvest in more properties: Use your tax savings to put down payments on additional rental properties, expanding your portfolio and increasing your potential for long-term wealth.

  • Pay down debt faster: With extra cash on hand, you can pay off mortgages or other debts more quickly, reducing interest payments and freeing up equity.

  • Improve your property: The savings can be reinvested back into your property, enhancing its value and increasing rental income.

 

If you have a rental property or two and are interested in seeing how much money you could be saving on your taxes—CLICK HERE to book a complimentary call.

We'll run your numbers FOR FREE and show you exactly how much you could be saving on taxes with a cost segregation study.

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