3 Amazing Benefits of Cost Segregation Studies You Need to Know Now

3 Amazing Benefits of Cost Segregation Studies You Need to Know Now

Today’s blog comes from Amanda Bead at ELB Consulting Inc. One of ELB Consulting’s specialties is Cost Segregation Studies. If you are not familiar with these studies, and you want to get involved in real estate, then listen up. Cost Segregation studies provide an amazing opportunity to reduce tax liabilities. As you probably know by now, Marc and I are very tuned into reducing taxes for us and our private lender partners. We always like to find new and better was to reduce our tax footprint. Here’s Amanda’s article……


cost segregation studies



Cost segregation studies can accelerate depreciation and lighten your tax load in the first years after investing in real estate. While the amount of depreciation will not actually change, there are some benefits to speeding your return on investment. Having a cost segregation study done may help to ensure that your real estate investment does not fail during these first few critical years.



How Does a Cost Segregation Study Work?

A cost segregation study is instrumental in breaking costs down into different classifications such as land improvements, personal property, and construction costs instead of depreciating all building costs as a lump sum. Breaking these costs down into these different classifications may allow them to be depreciated over a period of 15 or even five years as opposed to the general 39 years. Cost segregation experts review blueprints, architecture, and renovation invoices and determine how best to reclassify the depreciable assets.

  1. Will Increase Cash Flow

By accelerating the depreciation, the income that is generated from the real estate is sheltered. This means that less money is due for income taxes at the end of the year, directly increasing the amount of cash flow available. Having extra cash flow is always a good thing, but may catalyze further benefits at this early stage of real estate ownership.

  1. May Allow You to Make Improvements

Having the ability to make improvements to a newly purchased piece of real estate can be beneficial in several ways. You may be able to make improvements that are necessary to secure tenants, which can help increase your revenue stream by eliminating vacancies. You may also be able to make improvements and add amenities that justify a higher rental rate, increasing the amount of income each month.

In addition to making improvements to the property that may increase revenues, some additions may decrease future tax obligations. Energy incentives may be claimed as a deduction for future years, so you may continue to save money using the capital that was freed up by the cost segregation study. In some cases, cost segregation experts may be able to provide advice regarding specific energy efficient solutions that can be implemented.

  1. Can Free Cash Up for Other Investments

Investing in more properties or in other areas can help you to secure additional revenue streams and broaden your portfolio. If the cash that is freed up using cost segregation is substantial, securing additional investments may help to lend greater stability to your overall investment portfolio. This may decrease the risk inherent in the real estate investment and boost overall wealth.

If you are interested in finding out how a cost segregation study can help you maximize your cash flow from a new property, or if you are interested in investing in real estate, contact Simple Acquisitions today.


Thanks again to Amanda Bead from ELB Consulting Inc. for the blog submission. We always like to get useful information  from industry experts.


Remember, real estate doesn’t have to be complicated.

With Simple Acquisitions its smart and simple! 

Marc Dupuis

About Marc Dupuis

Marc got the real estate bug in his early twenties, and it’s never left. He has multi-faceted experience dealing with real estate investment companies. Marc’s is what you can call a real estate jack of all trades. He’s been an investor, landlord, property manager and builder in the Ottawa area since 1996 when he bought his first income property. He has since acquired a dozen income generating properties. He’s brokered property purchases for friends. He’s a partner in a commercial building and has built several new homes. His most recent build was featured in the May 2012 edition of Ottawa Magazine http://www.ottawamagazine.com/homes-gardens/2012/05/11/a-house-we-love-a-cliff-side-dwelling-in-chinatown-and-on-lebreton-flats/ Marc manages the research and acquisition activities for Simple Acquisitions, LP. He creates strategic alliances with financial institutions, property managers, brokers, attorneys, contractors, developers, and real estate investment companies on a daily basis. Marc is also the liaison between the company and its private lenders. Marc has an innate ability to see the end result when nobody else can. He’s known for bringing all the necessary resources together to achieve his goals. He loves to talk to aspiring investors and provide education and guidance where he can. He even sent a laptop to an unemployed man that he met at a gas Station in North Carolina who was down on his luck, in the hopes that it would be a tool that could help him learn about way to make a living.
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