In this episode of the Real Estate Investing for Cashflow podcast, Kevin, along with his business partner at Sunrise Capital, Brian Spear, talk cost segregation with Kimberly Lochridge. Kimberly is the Executive Vice President for Engineered Tax Services, Inc. (ETS), an industry-leading provider of specialty tax services in the United States. Kimberly’s business management skills have positioned her as a big-league tax expert for Fortune 500, ultra-high net worth individuals, single and multiple family offices, architects, engineers, and CPAs nationwide.
In this informative conversation, Kimberly explains what cost segregation is and how it can help businesses. She also answers frequently asked questions asked by Brian to separate fact from myth surrounding cost segregation. The guests also present and discuss a case study to further shed light on how cost segregation works and tackle other topics pertinent to this business practice.
“The difference between the 1040 and a 1040 EV is that the EV is the straight line or what you call the standard deductions and your 1040 is the itemized deductions, well, cost segregation is the 1040 for real estate..”
“Essentially when you sell a building, you’re taking what you sold it for minus whatever the purchase price was, which is your gain, but you also have to add in to that gain your accumulated depreciation.”
“There are different types of cost segregation studies and as you dig into this, you’ll have engineered based cost segregation and that’s where we actually rebuild the property from the ground up.”
“I think of the CPA as the family practice doctor and EPS is the brain surgeon.”
“When working with a third party property management company, you need to ensure that they have the information at the ready so that when they do those capital expenditures and do those capital improvements on your behalf, they’re actually handling the depreciation appropriately.”
- 4:20 Kimberly’s background
- 7:54 Kimberly explains cost segregation
- 11:13 FAQs about cost segregation
- 26:14 Brian and Kimberly tackle a case study
- 37:14 What is the DEERA report?
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