Atlanta investor, 5 rentals on standard 27.5yr depreciation. Cost seg study found $68,400 in accelerated deductions. Year 1 tax savings: $42,800.
01The Situation
This Atlanta investor had 5 rental properties all depreciating on the standard 27.5-year residential schedule. His CPA had mentioned cost segregation once in passing. The trigger was a real estate investor meetup where another investor mentioned his cost seg study generated $52K in year-one savings on just 2 properties. He had 5. He called us the next day.
02What We Did
We commissioned a cost segregation study across all 5 properties identifying $68.4K in components eligible for 5-year, 7-year, and 15-year depreciation including HVAC systems, appliances, flooring, fixtures, landscaping, and garage structures. At his effective 38% combined rate: $42.8K year-one saving.
Breakdown
| Property | Purchase Price | Standard Depr per yr | Accelerated Yr1 | Year-1 Tax Saving | Status |
|---|---|---|---|---|---|
| P1 Buckhead SFR | $620K | $22.5K | $18.4K | $5,888 | |
| P2 Midtown Condo | $480K | $17.5K | $14.2K | $4,544 | |
| P3 Decatur SFR | $390K | $14.2K | $12.8K | $4,096 | |
| P4 Sandy Springs | $520K | $18.9K | $12.6K | $4,032 | |
| P5 Marietta SFR | $340K | $12.4K | $10.4K | $3,328 | |
| TOTAL | $2.35M | $85.5K per yr | $68.4K yr1 | $21.9K yr1 |
Study cost recovered 4x in year one. He has since referred two members of the investor meetup group. One had 8 properties.
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