Why Cost Segregation Doesn’t Always Lower Your Taxes

https://www.youtube.com/watch?v=6iF6EVpauQc

Cost segregation is often promoted as a powerful tax strategy for real estate investors because it can accelerate depreciation and create larger deductions earlier. But larger deductions do not automatically mean lower taxes.

The Problem With Assuming Bigger Deductions Always Help

The key question is whether those deductions can actually be used in your current tax situation. Depending on your income, activity level, passive loss limitations, entity structure, and overall tax position, some deductions may be suspended and carried forward instead of reducing your taxes immediately.

Why Strategy Has to Fit the Full Tax Picture

Cost segregation should not be reviewed in isolation. A strategy that works well for one investor may produce a very different result for another. Real planning looks at income, timing, future property plans, documentation, and whether the deductions support the investor’s broader goals.

Watch the Video

In this video, Lisa Marie Odeja, CPA, Enrolled Agent, and former federal government auditor, explains why cost segregation does not always deliver the savings investors expect — and what should be reviewed before moving forward.

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