Rental property owners can significantly reduce their taxable income through various tax deductions, including expenses related to property management and maintenance. A crucial strategy is leveraging depreciation, where property value, excluding land, is deducted over a 27.5-year (residential) or 39-year (commercial) lifespan. Additionally, a cost segregation study can expedite these deductions by breaking down property components into shorter depreciation timelines, enhancing cash flow. This method, advocated by CPA Kristel Espinosa, can lead to substantial tax savings, with high-income clients reportedly saving seven figures annually through effective tax strategies.
Investing in rental properties yields significant tax benefits, notably through deductions that can substantially lower taxable income for owners.
By utilizing cost segregation studies, property owners can accelerate depreciation deductions, leading to remarkable savings in taxes and improved cash flow.
Depreciation allows investors to deduct the loss in value of properties over their expected lifespan, providing a strategic tax advantage in real estate investment.
A well-executed cost segregation study can break down a building's components into depreciable assets, vastly increasing potential tax savings.
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