Yonah Weiss, Madison SPECS 

Are you maximizing your tax deductions as a real estate investor?

In this episode of our series on how the tax Code applies to and benefits real estate investing, we are doing a deep dive into cost segregation with Yonah Weiss, Business Director at Madison SPECS. Yonah provides an in-depth explanation of how engaging in cost segregation studies can increase cash flow by accelerating depreciation deductions resulting in tax ‘losses’ that can be used to offset passive income and capital gains.

For the uninitiated, Yonah explains cost segregation, an advanced tax deferral method that enhances depreciation deductions that effectively reduce the amount of taxes owed by property owners, in 101 terms and then provides a deep dive into the details, explaining how it can be used to dramatically increase cash flow and profitability.

We talk about the differences between residential and commercial properties in terms of their depreciation schedules (as well as explaining what ‘depreciation schedules’ are) and discuss the specific implications for each. Yonah explains how he and his company actually conducts a cost segregation study and, for what it costs (and I am not being paid to say this!), Yonah’s company engages in some highly skilled and what sounds like laborious and detailed analysis to run their cost segregation studies using engineers and tax professionals to look at assets.

Using case study examples, Yonah discusses how to manage potential longer-term liabilities like ‘depreciation recapture’ when selling a property – something I have always thought of as the defining characteristic of the tax code that, ‘what the IRS giveth, the IRS taketh away.’

We also discuss how the benefits of a cost segregation study can apply to both sponsors and their limited partners (investors) as well as under what circumstances there may be variances in how the benefits are applied across the entire investor cohort.

Tune into this episode to gain valuable insights from Yonah Weiss on employing cost segregation strategies to enhance your investment portfolio's profitability by boosting cash flow and profitability through savvy tax planning. Whether you are new to real estate investing or looking to refine your approach, understanding how to navigate these complex taxation strategies could be key to optimizing your returns and are one of the driving factors that make real estate so important an option for all investors.