EP 016 - Maximizing the Benefits of Cost Segregation with Yonah Weiss

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Transcript

SPEAKER_00 0:00

Alright, guys, I'm excited to show you my recording of the conversation we had with Yona White. This one is about cost segregation. And I know that we, especially if you're my client or you know anything about real estate investing tax strategies, I'm sure you've heard about cost segregation. And in the first few minutes, we talk about some of the basics, but then we dive into a lot more detail. So stay tuned. Even if you're one of our clients and know about cost tags, stay tuned and you're gonna get some great nuggets of information. Some of the things we talk about are what type of investments are gonna create the most bonus depreciation after we've ran the cost tags. And then I kind of riff a little bit on what do we do after we ran the cost tags because tax planning for real estate investors or any type of clients is about more than just doing cost aggregation studies. We want to look at all of your sources of assets and income, current income and potential future income. And by doing this and evaluating all the current and potential future taxable events, we can do some strategizing and take advantage of you being in potentially a lower bracket with a cost tag and think about the timing of all different taxable events to really set you up for success, not just to save money in the current year, but also create future tax savings, uh tax savings in the future based on the actions we've performed in the current years of those cost aggregation studies where we get the 100% bonus depreciation. So stay tuned, there's a lot of good information here, and we talk about the future of what we're gonna see in the future as bonus depreciation phases out. And we're also gonna discuss some of the things that Yona Weiss has done to really make his name synonymous with cost segregation. Most of you guys have heard of Yona White if you're interested in cost segregation and tax strategies, but if you haven't, this guy is practically synonymous with the phrase cost segregation, and he has really built a strong brand and name for himself by generating lots of content, lots of networking, and just being a great resource. So he talks a little bit about that and his journey as a business as a businessman and and and a subject matter expert. So even if maybe you're you know everything you know, but but you're still trying to build your brand, you might get some good insight on that topic as well. Yona White's world class at this. So stay tuned. It's gonna be some great stuff. Subscribe to our channel and our podcast. We have great stuff coming your way, and I hope you enjoy this conversation.

SPEAKER_02 3:01

All right, cool. So we let's get started with our conversation. And um Yono Weiss, thank you so much for joining us today. For those of you listening live and those of you on the on uh listening to the replay, Yono Weiss has been a fantastic resource for me and like the whole world of real estate investing. He is um, I've never seen anyone more synonymous with the tax strategy than Yono Weiss. Uh I call him the man in black. He is the cost tech king, and he talks all about cost segregation. Um and um was interesting about you, Yona, and I want to talk about more than just cost segregation and real estate and taxes. Um, so we'll talk about how you've built your brand, and I'm interested in how you've networked and done all these awesome things. Um, to me, you were like, I remember you were like Lil Wayne in the early 2000s. Like, whenever I would hear rap music, Lil Wayne would show up. He was like in everybody's song, he knew everybody, he did com he did cameos everywhere. And eventually you're like, Who is this guy? And like I you knew everyone on LinkedIn that I had connected with as a real estate investor, and I eventually said, Who is this guy? And this was a while ago where I had like maybe three clients, and you gave me an hour, you know, a good amount of time, and I was I really appreciate your generosity at the time. And our the plan involved a cost tag. Unfortunately, the the the deal didn't go through, but you helped me out with estimating the losses we could have created with the cost tag and the write-offs.

SPEAKER_03 4:45

Right.

SPEAKER_02 4:45

And um, since then, Yona's been a really great resource and colleague. And today we're gonna talk about cost segregation and some ways that we can use it and take advantage of that and some other strategies we've seen. And uh, Yona, in in your own words, can you introduce yourself in 60 seconds or less?

SPEAKER_04 5:05

Absolutely. Well, first of all, thank you so much, Mark, for hosting me. Very kind words. Uh, and a great analogy, Wayne. I I never would have thought of that one. But it's like, you know, if you put yourself out there, this is a really great way to kind of brand yourself. And something that, yes, it's true. I I did, and showing up on podcasts and being very active on bigger pockets and all the different social media for, especially LinkedIn was extremely beneficial. So for our business, and I worked for a company called Madison Specs, we're actually the largest national conservation company. And I found on early on in uh in working for them about five years ago that very few people knew what this thing called conservation was. So my background is in teaching, and I basically took upon myself to just spread the word and talk about it to everyone far and wide. You know, so that meant going on podcasts and doing webinars like this or or others. And since then, I've done you know over 300 podcasts, and that's before hosting my own podcast, Weiss Advice. And um, yeah, that's that's what we're doing. Madison Specs has to date done over 20,000 cost segregation studies across all 50 states and every asset class, and just happy to be that industry expert and showing up just to add value to everyone where I can.

SPEAKER_02 6:21

Yeah, awesome. So, you know, we'll talk a little. Let's talk in, you know, I'm I'm sure you talked, uh I talk about cost segregation every day of my life. Um I talk about cost segregation more than my family, more than my cat. Um, but to maybe a beginner audience, can you give us maybe a very quick overall summary of what cost segregation is?

SPEAKER_04 6:52

Absolutely. So, you being a CPA, no, you're talking about cost segregation because it's a tax strategy. And, you know, not all CPAs are familiar with all the tax strategies out there, especially those that are related to real estate, because there are many CPAs that are just you know number punchers. They're just plugging in numbers. But someone who's actually taking a proactive role to try to uh have a little more uh uh strategy involved, that's something that that you do. So conservation is a I don't know if you can hear those parakeets chirping over there, but I think I need to put them to sleep because they're making a little bit of a second.

SPEAKER_02 7:35

I don't think I they weren't too bad.

SPEAKER_04 7:37

I heard them a little bit, but maybe trying to call call someone to to cut put them to sleep or something, you know. Um I had one time I was doing a webinar and someone's like, you know, tapped in the in the chat, whoever's birds are chirping, please mute yourself. I'm like, oh, that's me. I was giving the webinar. So if you guys hear the hear the birds driven, I'll have to put that get them quiet. Anyways, cosmagent is a tax strategy that allows you to take depreciation deductions at a faster rate. So essentially taking from the pool potential depreciation deductions, instead of taking a little bit each year, you have an opportunity to tap into those deductions and pull forward a lot of them so that you can uh use this tax strategy to get more deductions up front. I mean, as simple as that. It's it's done through a very detailed engineering report of the property that you know breaks down the property into its individual components. But in short, it's a tax strategy that allows real estate investors to get more deductions in the early years of ownership.

SPEAKER_02 8:38

Right. Absolutely. Uh and so what we do with our clients is we take real estate, we take real estate assets and we look for opportunities where those losses are valuable. And what we can do is if we can take those, if we can treat your losses as non-passive, then we'll accelerate depreciation, and then with those non-passive losses, use them to offset other sources of active income, such as that from your W 2 or 1099 income. And so the two ways we can do it: real estate professional tax status. If you work full-time in real estate, there are other variables, but I don't want to take you down to too many rabbit holes. Or if you materially participate in a short-term rental in the average late days, seven days or less, you want to see a decent amount of purchase prices and bases in the property to justify that so we can create enough tax savings to justify the extent procedures and uh the prices for these uh for the study. Now when we think about the value here, let's break down the numbers here. Uh, what's a good way of estimating my rule of thumb has typically been around 25% to maybe 30% for some of the properties that have a little more uh unique features that'll qualify for five more personal property in the properties like sort of rentals, code with furniture. So we add another 5% to our estimates. But uh what do you typically see and how would you potentially estimate what the how much is going to qualify for this bonus appreciation that we write off immediately with cost that?

SPEAKER_04 10:18

Yeah, so we always like to do a free estimate up front so we can show the potential tax savings. But you're absolutely right, especially when we're doing those short-term rentals, we have a lot of furniture, fixtures, amenities. And that's what we're doing with the cost segregation. As you mentioned, the bonus depreciation, the upfront write-offs are based on that personal property, the property that depreciates on a five-year schedule. So it is on average, probably for those short-term rentals where you actually own all the furniture, probably around 25% is a pretty good, good rough number. And so that allows you to take, you know, if you buy uh a property for a half a million dollars, I mean you're talking about after you're taking off a small amount for land, you're talking about maybe$70 to$100,000 right up front of tax write-offs. So, I mean, that can be a huge game changer to lower your taxable income and potentially, you know, have have losses that can carry forward or can be used against other income.

SPEAKER_02 11:10

Yeah, and so here's some things we want to think about too. So here are there might be some instances where you might be a little disappointed by your depreciation. And that might be if you are investing in a in an expensive area, like if you're investing somewhere on the west coast of California on the beach or you know, an expensive, fancy beach town. What's gonna happen is you're gonna the when the appraisal comes in, you're gonna assign such a high value to the land, there's not gonna be a whole lot of additional building bases for you to get those write-offs. It still will likely be worth it. Um, but that's an instance where the amount may go down. Um, and here's something really cool though. I mean, this isn't involving cost tags, but there's something called a C store. And basically, if you are what the IRS calls something along the lines of like a distributor of motor of um of fuel, you could potentially write off a hundred percent of that building in year one without even doing a cost tag, which is pretty awesome as well. Um so but we see but so you know, the at the end of the day, at the end of the day, here the opportunity when you own real estate and buildings and the massive amount of depreciation that comes out of that you can write off, even if you're financing a building, you're still writing off oftentimes more than you're putting down into the property. So yeah, um one of the things thinking about how the numbers play out, um, one of the things we've been chatting about is um, you know, what type of assets potentially can create more write-offs than others. Uh, what kind of buildings and what have you seen with mobile home parks?

SPEAKER_04 12:55

Yeah, it's an amazing thing. Uh, you know, mobile home parks are one of the interesting asset classes and RV parks as well, that allow you to take a huge amount of bonus depreciation. So when you think of mobile home park or mobile home community, whatever you want to call it, you're like, well, what do I even own? Oftentimes you're buying a property and you're like, well, it's just land, especially if the tenants own all their homes, which is very often the case. Um, but what you're not thinking about is that there's a category of depreciation called land improvements. And so that's what's on top of the land. And if it's paved roads, you know, you have concrete pads under each home, you have landscaping, fencing, uh, you know, water strain uh drain systems, etc., all of that stuff is considered land improvements. And essentially that's the majority of the value of what's going into the property. That being said, uh, there's also an opinion, which not all accountants will agree upon, uh, but there is some tax literature surrounding this that some consider the mobile homes themselves as five-year personal property, which means if they are still considered quote unquote mobile, meaning if they still have the wheels on them and you just pull back the skirt and you can see they are potentially movable, you're gonna be treated as five-year property, which means you could potentially have, besides the land allocation, which, you know, again, can be 5%, 10%, 20%, 30%, whatever that is, the remaining basis can literally be, you know, 80%. And I just did one today where they had literally 88% of the tax basis was going to the bonus depreciation. Oh my god, 88%. Yeah, it's pretty wild. So there was that very little, very little structure. You know, the only thing that was going to the 27.5 uh year schedule, which is structures, there were no structures on the property that were owned. But the only thing that was going to that is the infrastructure utilities. So like the water lines, the gas lines, septic, and electric lines, those are considered infrastructure. The value of those, you know, per square footage or per unit is going to be what the only thing that's going to be in that 27.5 year depreciation schedule.

SPEAKER_02 15:03

Wow. So imagine you put$200,000 down into a$1 million property and you write off$80,$887,500 in taxes. That's crazy. Imagine you're let's say you're in a 30% federal tax guy. So it's like your your deduction is more than your down payment. I mean, your refund that you can generate is more than your down payment here, or like you know, break those down. Let's say you put maybe not 200, but let's say you know you put$50,000 down and just you know shrink the numbers in proportion here. But like that's that's incredible. And when you think about the compounding of your wealth, you know, you get your money right back in the form of a refund. You know, the BERR strategy is really popular where you get your your money back in the form of refinancing, and you can still refinance too. So you get your money back in the refund and in the form of um of doing a BERR and improving, maybe improving some of the valuations there as well, which is just amazing.

SPEAKER_04 16:08

Yeah, it's incredible. And you know, to think, especially when you're giving the uh, and you as you mentioned before before, the real estate professional status where you're able to use those deductions against any other source of income you have, you know, it's not just about creating these losses, it's about actually, you know, saving a huge amount of potential money that will be going to Uncle Sam, that you can use that to reinvest and you know, just buy another property. I have plenty of clients that they tell me the amount of money that I saved on uh using the cost of irrigation, they were able to put a down payment on another property. Uh so that I mean that's just incredible.

SPEAKER_02 16:44

Yeah, and that's to me, that's really the purpose. So if you take your tax savings and you say, Oh, I'm gonna be rich and buy yourself a Lamborghini and a fur coat, you know, you're you're losing future depreciation. So if you're not taking, if you're not, you know, if you're not putting that money back into your business endeavors, you're gonna find yourself with less write-offs in the future. But if you're smart and you put into more real estate, and that gives you more depreciation, you run more cost tags, and you see that compounding long-term growth of your wealth over time. So another thing we didn't talk about, which is interesting, it's not as common, but we have taken advantage of this with clients. So let's say you don't have real estate professional taxes, let's say you don't have short-term rentals, how can we also use Costax? Well, there are two other instances that I've seen. One is if we have the rentals operating at a profit where the revenues exceed the expenses, after we've looked at how all the numbers come together, we can use the Costa Act to offset the taxation on their rental portfolio. So sometimes we see this if you know you have a collection of older properties or you're a wholesaler and you get some cheap$30,000 and you have wholesalers getting houses for free. I'm like, you guys are killing me. Um, so those are instances, and then another thing that we've seen is if you have other sources of passive income. So you know, if you are a passive partner in a partnership, it can't be a husband and wife because of the attribution rules, but let's say I had a client who was a partner in a tech startup, and part of our tax plan was first we realized that the prior accountant misclassified his income as active, but it was passive because he was a passive participant, he didn't materially participate. So we reclassified his income from pat from active to passive, and then we ran a cost tag on his long-term rental, no rep status, but we still use those losses to offset the profit that role flowed through on his K1 from the partnership income. So not only did we eliminate the payroll tax with the prior accountant had it taxable and with payroll tax because we thought it was active income, we classified it as passive, and then we use the royal estate laws to offset the passive, and we we save, I believe it was tens of thousands, and we'll save him hundreds of thousands of dollars with these strategies.

SPEAKER_04 19:14

That's pretty awesome. And I think that really just goes to show you when you have a CPA like yourself that's being proactive and figuring out the different ways that we can utilize and the different strategies we can utilize. You know, it may not be just cost segregation, but it's combining with other things as well to make sure that the individual has you know the best way that they can reduce their taxable income. I love that.

SPEAKER_02 19:34

Yeah, so let's talk about another thing that is because I know that I talk about cost segregation all the time, and it is really widely known. So I want to talk about some things that people talk a little about a little bit less. So um in addition to reducing our taxes, obviously, uh, from the write-offs we generate. Uh, we also can consider cost segregation as um a valuable tool when we dispose of the properties. Remember that we are, you know, you know, there are there are some tax tracks with um depreciation recapture, but also because we have um we have assigned a valuation to these individual property items in the real estate, when we look at the recapture, we can sometimes mitigate some of that recapture by re-evaluating the value of certain items that have never regained their value in the asset. I'm not sure if I explained that so well, but Yona, maybe you can explain some examples of what you've done to help with um eliminating the recapture tax on some of these components you've identified with the cost segregation study.

SPEAKER_04 20:42

Absolutely. Absolutely. So this is a strategy called partial asset disposition. And and this is something that think of it like this. Once you've done a cost segregation and you've shown what the actual value of those individual components are. So let's say you have uh, I don't know, a refrigerator, okay, uh, appliances, whatever it is, and you allocated, you know,$5,000 to your appliances. Well, that's showing from a tax perspective that it's being depreciated on a five-year schedule. Or if you take bonus depreciation one year, what happens in five years from now when you sell the property? Normally you would have a depreciation recapture tax on whatever amount of depreciation that you took. And the recapture tax rate on those items that are accelerated depreciation, like the appliances, is going to be at your ordinary income tax rate. However, since you've already shown that there's no value, because from a depreciation standpoint, it's already been fully depreciated. So now when you do this partial asset disposition, what you're showing is basically a tax form showing that these appliances have no more tax value. Therefore, they're being taken off the books and there's no recapture tax on that amount. And so that's essentially uh you know how it works.

SPEAKER_02 21:57

So, you know, I haven't we don't Really see this opportunity very often with our clients to take advantage of this. Um, and what threshold amount for the properties um is it worth? Have you found going this extra step with with with this analysis?

SPEAKER_04 22:15

You know, that's a really good question. I don't know if they're there what the threshold is. I mean, again, it's really going to come back to is the effort worth you know the benefit, right? Filling out these forms and doing the partial access as a disposition. The advantage is that if you have the Excel forms and you have that will give you with the concentregation, you already have kind of all those items broken out. So it's not that much more work than upon the sale to go ahead and just uh just calculate that. And what that can do, like we said, is to reduce your taxable liability. Um, you know, at what what point does it make sense? I guess the question is, you know, at what point do you need those tax write-ups or or getting around that recapture tax? I mean, that's really where it would make sense. So if you're talking about, you know, 10,000, saving 10,000 or 20 or 50 or$100,000, I think that's you know, that's really going to be the question on an individual basis.

SPEAKER_02 23:11

Yeah, you know, I I would think that um you you would want to, I mean, there's several variables we'd want to explore, right? Like how much is the recapture, what is the potential tax liability, what is their tax rate, where are the what is that client's other sources of depreciation and income, and uh and then evaluating how much work is it gonna be and where you know to determine these amounts. How long have you owned the property? If you only owned it for one year, then you know, maybe the valuations haven't really diminished that much, but if you've owned it for 20 years, then you're gonna probably see greater benefit from it.

SPEAKER_04 23:47

Right. And the other thing to consider, I think, is um is really like, do you have other losses, you know, in the current year? Meaning the other passive losses that you may have in that same year of a sale where you're gonna try to use that partial asset disposition, you know, you may be just be kind of churning water. You may have enough losses already to kind of offset that tax in the first place. And so it may be just like going through the extra effort to reduce those, those, that gain. But in the end of the day, you may have enough losses that you may not even need to go through those steps.

SPEAKER_02 24:23

Yeah, and another thing that I forgot to mention. Now, this isn't common, but we may see an opportunity. A lot of people talk about 1031 as a great way to defer capital gain status. But here's another instance where let's say you don't have Rev status, you don't have short-term rentals, you may, in some circumstances, be able to use cost tag from one property to offset the capital gains from another transaction. Another opportunity there. So, and that and that's why there's so many ways, especially with capital gains planning, uh, there's just so many ways to look at um the equation there when you evaluate your goals, what you have now, what you will have, what your tax rates will be. There's like a million different variables, and that's just one of the so many. So um I think one of those, so for some of our clients here who aren't, I mean, some of our audience that aren't CPAs, that's why it's so important to talk to your advisor and a qualified advisor before doing any of this. We just talked to a I got a lead from a client, a prospect who did his own 1031, didn't ask the accountants. No, yeah, we just um read some bigger pockets articles, which are good. Um but uh he made the assumption that that was a good idea, but he already had like$150,000 of suspended losses to offset the capital gain. Now he's going through all the all the extra effort and steps to do the 1031 exchange, and it it's just a it's a waste of time. So um some other things that I'm also curious about, well, some other things, some other opportunities with COSEG, uh and here's just a little thing is if you are um with secession planning and the states and and things of that nature, when someone passes away and it in the last year of operations, if we were to do a COSEG, you can actually do a cost segregation study after they have passed away for that year and accelerate the depreciation in their in the year of their date of death, and then it still gets stepped up to fair market value when to their heirs. So is it so if you're on the fence on whether to run one because you're losing depreciation in the future, there is no future, unfortunately, for that owner. But you you also um it's just a night, it's just another opportunity and um to create some additional write-offs on that return where um you're not, you know, some of the downsides of cost saying maybe you'll be leave depreciation, uh lose depreciation in the future. That's not really the case because it gets steps right up to fair market value. Um that's huge.

SPEAKER_04 27:09

Yeah. And and even just kind of to go on that point for a second, a lot of people don't think about that. Like if you've inherited a property, right? You can do the the step-up basis, meaning you're going to be able to get the fair market value now. You can do the cost segregation on that new, even though it's been fully depreciated by whoever you know repeat that to you, you're able to now take a conservation from brand new based on that new market value.

SPEAKER_02 27:34

Yeah, and you know, they've been trying to change that in in proposed legislation because it is a cheat code. It's it's really you want to talk about a way of creating generational wealth here. I mean, the depreciation starts right back up again. And that's when you think about the tax benefits of real estate, you can't not talk about depreciation. And um one of the on a side note though, you don't get the bonus depreciation if you inherit it, but it's still you're still gonna see value from the cost even without bonus depreciation. Um so one one thing I'm asking, I'm curious to know. Um, so how how long have you were you doing cost segregation studies before the Tax Cut and Jobs Act?

SPEAKER_04 28:21

Uh we were, yeah. I actually joined Madison uh and started the conservation about a year before that. So obviously the tax cuts and jobs act was huge. I mean, it made a very big difference, um, especially you know, with the bonus depreciation, 100% bonus depreciation coming into play. So that was that was amazing. What was amazing to me, and especially now that we're talking about, you know, next year being, or this year being the last year of the 100% bonus depreciation, is people were talking about, well, will conservation still be beneficial if you can't take the 100% bonus depreciation? And I'm like, we you know, our companies, we've been this has been around for decades, you know, conservation has been around for a long time. No, it will not be as beneficial, but it still will be extremely beneficial.

SPEAKER_02 29:07

Yeah, and that's that's something that I'm really interested to see in how our planning and strategies evolve. And so when you I mean, maybe you're you're not looking at the 1040s of these clients, but what well what I'm I suspect what we're finding is we're still getting the properties to operate at a loss even without bonus depreciation, correct?

SPEAKER_04 29:31

Yeah, absolutely. Um, and and that that's really the point. Like if you can if you can create a loss, I mean, that's really where it's gonna be beneficial. And and as you know, it's not gonna be beneficial for everyone. Okay, it's never conservation is never gonna be the right fit for every single person. But if if you can get it done uh on a property and create that loss, that's gonna be where it's gonna be uh the most beneficial.

SPEAKER_02 29:55

Yeah. So what's interesting is what I think you know, for a lot of our audience, you know, I think that right now with the with 100% bonus depreciation, it has opened up the opportunity for lots of people to do cost segregation and to justify those procedures. And even if you have a place of 300 to 400,000, you can still create a good chunk of losses and and significantly impact your 1040. But what I think, and you know, I'm interested to hear your perspective from what you saw before then. But what should what we'll likely see is the threshold by which it's worth our energy to do the cost tag, the value of that property, we're gonna want to see we're gonna need it, it's gonna be less and less impactful on these smaller priced properties. So in order to really see the benefit, either you're gonna have to go bigger or and and or we're also gonna have to um, we're not gonna see as many opportunities for some of these beginning investors who are getting properties for 200, 300, 400,000. Absolutely. Yep. Um, so have you so what are your thoughts on, you know, I imagine that you know, after Tax Cut and Jobs Act, you saw a whole new group of investors coming coming through your door to talk about this stuff. And what perhaps in the future, you know, what are your thoughts on the projects we'll see and and you know the changes we're gonna be seeing in our strategies?

SPEAKER_04 31:27

Um, you know, the the biggest thing that I saw is, you know, our threshold used to be, we used to tell people all the time, you know, if a property is purchased for over a million dollars, that's where it's gonna be most beneficial. Um, and you know, when Tax Cuts and Jobs Act came came about, and we're talking about using the 100% bonus, especially for smaller properties and then with short-term rentals and using the strategies, you know, I would say a half a million dollars, like cut that in half. And the truth of the matter is really, if you even if you go down to a two or three hundred thousand dollar purchase price, you're still gonna get a tremendous amount of benefit. Without the bonus depreciation, that's gonna be much less. Because again, if you're only able to take those deductions, again, we were talking about like 25%, for example, to the five-year property. If you have to spread that over a five-year period, the net benefit in that first year is gonna be much less. Okay. And the second year as well. So the threshold, like you said, is definitely gonna be is going to move back up, I think.

SPEAKER_02 32:22

Yeah. So for some of the audience listening and beginning investors, we have a lot of clients that are beginning investors and who are just now learning about this stuff. Like this is, and you know, obviously, I don't know what the future holds for us, but I suspect that we're gonna look back on this time as a golden era for real estate investors where we look at what you can do with short-term rentals and you look at bonus appreciation, and there's just an insane amount of opportunity to create tax savings, especially for people who want out of the W-2 lifestyle, and they want to use these tax advantages to get additional capital and to put right back in. So, for those of you guys listening, you know, we're this this opportunity, these opportunities are not going to be as incredible as they are right now. And in the future, you're gonna have to, you know, hopefully, and a lot of clients already of our clients are already moving on to bigger and more um lucrative projects with more access to depreciation. They've already quit their jobs, they've used the tax savings, and we're working we're working on the bigger projects. Um, but for those of you who guys are getting started, you know, you really want to take advantage of this time because the time is running out unless we see some changes, and I don't think we will. Um, I don't think that we're gonna bring back bonus depreciation after it starts phasing out right away. But I mean, I'm not a politician.

SPEAKER_04 33:42

You never know. There is a lot of uh from what I've heard from from a couple of people who are involved in the in the space, there has been a lot of lobbying uh to try to continue the 100% bonus depreciation. Uh I think there's a good argument that it actually contributed uh a large amount to the spur of the economy, especially the spur of the real estate industry, which kind of trickles down to a lot of different industries. I mean, you think about all the different service providers and all the different vendors and connections and property management, everything that is involved in real estate. Um, I honestly believe, and that's one of the reasons why they introduced the 100% bonus depreciation in the first place, because again, when you get those extra deductions, what are you doing with that? You're just putting that money back in to buy another property or to do more business or to invest more. And so that's why it was created was to invest more in the economy. I think it did that purpose. So I see a good argument to just you know continuing that, especially now with how uh, you know, unfortunately, as we've seen in the past year or so, the the economy has kind of taken a big hit.

SPEAKER_02 34:51

Yeah, and I I mean I would be I would be very interested to hear what kind of conversations are taking place on the in the political sphere on this topic, because you know, at least what I've seen with our ability to help our clients flourish and build their portfolios. I mean, it the ability to do cost segregation and get bonus appreciation has changed their lives. So, you know, I did a cost setting with you, Yona, and we wrote off like 38%. It was like$280,000 of a of a cabin. And that client, you know, he got a$60,000 tax refund. He and his wife had W2s, and he quit his job. And it's not like he quit his job so he could be retired and and be on the beach tipping margaritas, and he's doing multi-million dollar projects now. I mean, he's buying, he's building all sorts of properties and and all sorts of creative of opportunities, and he's mobilizing and inspiring other investors to do cool stuff. So it's really fun to see the impact of these tax incentives and how it helps clients um and the economy flourish.

SPEAKER_04 36:03

Yeah. 100%. That's amazing. That's an awesome story. And I love those stories because that really makes such a huge difference for me. So I love when I hear that. And people are able to retire or or their spouse is able to retire. And you know, using that strategy, especially with the spouse being the real estate professional, that's something that I've seen. And, you know, people aren't necessarily retiring to just travel the world or or you know, sit on the beach or whatever. They're changing professions to a certain extent, but doing something that they enjoy. And I think that's really the the main difference. If it is something that you enjoy, if real estate investing is something that will give you more freedom, more financial freedom, time freedom, location freedom, these are things that a lot of us strive for. And what I've seen is so many people going down that path and uh and being successful. So, you know, good for good for them and good for you for helping them figure out these strategies that they can do that.

SPEAKER_02 36:56

Yeah, and and you know, and that's what people don't realize like taxes are awesome. Like doing tax advisory, you know, I tell people you don't realize how cool it is to do what we do, where we can have these incredible impacts on the projection of people's finances and careers and life paths, you know, that they can, you know, change their careers and adjust their lives and spend more time with their children, do projects that have a greater impact on the community. Um, it's not just about reducing taxes, we can really impact their lives. Um, another thing to talk about here is you know, what do we do after the cost tag? So we know let's say we're in a year where we're dropping these clients, you know, our clients into a zero dollar tax bracket. Um that's fantastic, and if we get a refund, that's fantastic. But there's more that we can do. So one of our strategies is income shifting. So we want to shift some income into that year with the losses from the cost tag. So let's think of maybe you're thinking about selling your way out of a partnership. Maybe you're thinking we talked about capital gains planning, combining that with cost tags. If you're in a zero dollar capital gains bracket, maybe you have some stock port, a portfolio of stocks that we can start liquidating and take advantage of not paying capital gains tax on that. Maybe even things like installment sales. If we know for the next few years we have enough depreciation, and our investment strategy will keep us at a$0 or a low capital gains bracket, the installment sales can eliminate capital gains instead of recognizing all your capital gains at once. So many different ways that we can look at this. Not only are we going to eliminate your taxes in the current year, but we can set you up for success in the future years by shifting some of those income and tax triggering events into the years of the lower brackets. So lots of cool combinations and variables that we look at with our clients.

SPEAKER_04 38:50

Absolutely. That's a good idea. You know, to be honest, that's really more in your boat. You know, after the conservation is done, I kind of take a back seat and you know, wait for the next deal, wait for the next property. But I obviously there's so much more that goes into it. So, you know, kudos to you.

SPEAKER_02 39:08

Absolutely. So let's talk. So here's some things I'm interested to know. Um, so you know, like I was talking about earlier, you know, let's you know, let's shift our our energy away from the taxes and the cost tag. And what I'm curious to know is, you know, what back to how I found you. And there's one thing that you know is so unique about you is that you're just like everywhere and like everybody knows you. Um I'm curious, you know, how have you built this, you know, this name and brand for yourself? And um can you tell me a little more about like the benefits that that you've seen from from creating all this content and connecting with so many people?

SPEAKER_04 39:55

You know, it's unbelievable. The LinkedIn, especially, has been a tremendous resource. One thing that has helped me more than anything else, I think, and you know, the just the consistency of showing up every day. And I kind of took upon myself about five years ago to, and it was really on a whim, I saw some other people doing it, but it was really just to post some original content, um, and not just like a random link or a random article, like something that's actually thoughtful, thought provoking, uh, whether it's a story and stories happen to work really, really well. So like I would just post something and do that consistently every single day. So that's what I've been doing, and it just builds on itself. But another thing that has been really helpful has been guesting on podcasts. So you're kind of leveraging someone else's audience. And I like to look at Gary Vaynerchuk, Gary V, as um, you know, someone I look up to in terms of his marketing strategies. I've read a bunch of his books and you know, follow him on social media platforms. And he is kind of prolific in saying how to do things and what to do. But more than anything, what he's talking about, if you go kind of deep and you look into the core values that he's all about, is just you know, two things, basically listening, right, really caring about your customers or your clients. And number two is adding value, right? That's his book, jab, jab, jab, jab, right hook. Um, he wanted to call it before the publishers cut it down, like jab, jab, jab, jab, jab, jab, jab, jab, jab, jab, jab, right, like 20 times. And that's uh before the right hook, because the right hook is the sale, but the jab is just adding value, adding value, adding value. How can I do? What can I do to help you? What can I do to do something for you? And, you know, by doing that, what you do is become someone that, like you said, just showing up everywhere that people see you, they recognize your name, they automatically think that's what the branding does. They automatically see your name, they know what you do. And so my name has become synonymous with cost segregation, which you know, that's that's great for our business. And that's what I do. But really, in the end of the day, I'm just out there to try to help people in as many different ways as I can. This is one, you know, one way. And this is something that obviously it's a win-win, you know, it's it's our business. We have profit, we have revenue from that, but we're helping people, you know, every single day, like save money and save taxes. And that's really that's really what it's all about.

SPEAKER_02 42:14

Awesome. And so is there anyone else that you know, maybe was your role model or you were you were looking to follow and in model yourself out with?

SPEAKER_04 42:26

Um yeah, there, I mean, there are definitely a lot of people, especially when it comes to like social, social media and marketing, uh, digital marketing. I kind of find found you know, many, many people over the years that are digital marketers and I kind of just like to watch what they do because you know, like every platform is different. Okay. And yeah, you know, you maybe just try to put everything on every single platform, and that can be beneficial to a certain extent. But when you kind of hone in and figure out the platforms and figure out what works the most, the way that you do that is by following like people who are successful digital marketers because they're bringing, you know, they're not doing what they're doing unless it's actually bringing profit to them, right? So you are like, okay, this is what they're doing, this is how they're doing it. The nuances, it takes time, but it's really if you're just doing it consistently every day and kind of learning some of those nuances, it it's a tremendous amount of value. So I don't know if there are any names specifically that come to mind, but definitely a bunch of people over the years. Uh Ryan Stirhant is another great, great example of just someone that is uh, you know, sell it like Stirhant was one of those books that I that I read early on. It's just again about just being there for other people and going out of your way to sharing stories and sharing other people's stories, also.

SPEAKER_02 43:47

Awesome. Well, what I'm also curious about is so you see all these people seeing all these benefits and saving millions of dollars from the cost area easy. So um, do you ever get FOMO? And are you investing in real estate or are you doing anything to take advantage of the tax instead of the advantages of real estate investment?

SPEAKER_04 44:10

Absolutely. I mean, I wouldn't have to take fall off, but I mean I would love to be, I because I really do love what I do. And so there's been a lot of, you know, I've had conversations with myself and with mentors, like, what should I do? Is it something I should pursue? Should I go into like the capital raising? Should I go into the syndication space and become like an investor, like tons of my clients are? I know at the end of the day, I very well could do that. And that may, I think I lost. Yeah, I lost for a second my my connection cut. So yeah, I mean, I have invested, I do invest mostly passively at this point. Um I've been involved on uh an active deal as a general partner for one multi-family syndication, a very, very minor role. So I definitely have seen the benefits. Um, and I am a very avid uh proponent of uh you know real estate investing. So big, big fan of real estate investing, investing in multi-family and self-storage and multi-duty. So definitely trying to diversify there as well.

SPEAKER_02 45:20

Yeah, you know, I when I started my practice, I did it originally because I wanted to be a real estate investor, and I was too you know, part of it was I wanted to be thinking about other investors, and they saw it with a CPA, they're like, you must know how to save money in my taxes. I didn't have like, well, I can't, I couldn't see myself paying anyone else to do my taxes after all the work I went through to be a CPA. Um I also started discovered I was actually passionate and interested in this stuff. Um but now whenever I think about the opportunities to invest in real estate, and I probably will get back into it if I just have one deal right now. Um I also find that there's so much opportunity and there's this just this infinite, there's this infinite universe of tax-saving opportunities and strategies and services we can provide our clients. It's just so exciting, and now it's it's just I'll never I'll never find everything I want to find. Like there will always be more opportunities out there, but uh I always find myself drawn more now to the area of of helping people and improving on and expanding upon our services um and dedicating my energy towards that, and the ROI on that is just insane as well. Um it's hard to find the time and energy when when you find where you know where your your path is. 100%. Um so uh you know, I think we had a good conversation on cost irrigation. Is there any other um unique or uh nuggets or anything else you think worth talking about?

SPEAKER_04 47:01

Yeah, we did. Uh I mean obviously there's so much we could cover more, but these are these are great tips. I think making sure you have a CPA that is looking out for your best interest and giving you these strategies to help you scale is probably the most important thing to get out of this.

SPEAKER_02 47:17

Yeah, I I think also for you know a lot of people just assume they need a cost tech study. There's so many other things. A lot of times, you know, obviously cost tech is going to be incredible, but you really want to be collaborating with your accountant in planning for this. And let's say you're trying to save money on an accountant and you you order the cost tag before the end of the year. Remember, we were talking about earlier, you really want to take advantage of you being in that low bracket. You may have missed some opportunity to shift income into that year with the zero dollar taxes, and that time has come and gone. So, you know, the sooner you can start collaborating with the CPA, uh, the sooner the more the the better you're the better off you are to optimize your situation. Uh so so um before we close out, can you uh tell everybody about how to find you and learn more about what you do?

SPEAKER_04 48:13

Yeah, definitely. I mean, you can find me on all the social media platforms. Uh obviously LinkedIn is the biggest one that I'm most active on. You can also go to yonawite.com. That's uh my website has a lot to do with what we're working on uh on the conservation side, on my podcast, on real estate investing, etc. You can also go to our company, Madison Spec. And uh, you know, if you want to get a free estimate for any property, uh happy to do that.

SPEAKER_02 48:40

Awesome. Yoda, thank you so much for your time today. I uh for every everybody listening, this inform you know, this content, even though it's recorded live, you can still watch our replay on YouTube and on any major podcast player. You can find some of the stuff on our site, and obviously you know where to find me if you have any additional questions. Um and again, Yona, thank you so much, and everybody have a great night. Uh and Yona, thanks again. Um I don't know why we have like 30 people live for our short-term rental investing webinar. And I guess I don't know, I guess the time of year is talking about cost.

SPEAKER_01 49:25

I think it talks about cost second about anyone who listens to the replay.

SPEAKER_02 49:37

Yeah, yeah. Maybe that's what they said. Like, I'll wait for the network, I'll wait for the thing on uh on the podcast. Yeah, well that's cool. So um, yeah, thanks again. And um, how should we go and everything's doing all right?

SPEAKER_04 49:53

Doing great, doing great. It's been a busy time, and uh you're looking forward to tax season ending.

SPEAKER_02 50:01

Same here. So I I mean here's the thing is this year I'm actually treating it more like a marathon, and I'm not stressing over April 15th or 18th. Because we're I mean, last year I felt like I was gonna have a heart attack on October 15th. And I gotta pace myself to get through there. So I'm actually putting more energy into recruiting talent right now and just pacing myself psychologically and physically for it's an entire for us with cost tax and all that stuff, you know, it's it's a you know an eight-month-long busy season.

SPEAKER_04 50:35

So yeah, that's true. And we're I mean we're busy year round, but it's just you know it's traffic just getting the reports out when people need them for the tax plan deadlines, it's a bit a little stressful.

SPEAKER_02 50:48

Yeah, I meant to ask you, New York City, and you live in New York City. What what do you think are the um what do you think would those percentages like a 25% estimate be similar in a condo in Manhattan where the land is so expensive and the building structures are a little bit different and you don't have land improvements on the condo?

SPEAKER_04 51:11

Yeah, you know what? Probably not. Uh to be honest. First of all, the land, if it is the condo where you actually don't own any land, so that's an advantage, but at the same time, you also won't have any land improvements, right? So it's kind of a double-edged sword there. But for condos, it's like sorry, you got a little faulty connection there, but typically condos have a little bit less uh personal property in them and more going into the value of the property itself, into the building structure. So I'd say it's uh probably more of a 15 to 20 percent uh reclassification when we're looking at condos.

SPEAKER_02 51:57

Yeah, you know, I wanted to I wanted to get into New York City real estate investing demographic because you just have these massive 15,$300 million buildings. I thought it would be really fun, but the barrier to actually in New York City real estate investing is so high. And I find that most of my clients in New York make around what my clients in the southeast and midwest earn, and they're just pay more, so they have less money left over to invest a lot of times. So I was, I mean, I love some of our clients in the Hudson Valley are doing really cool stuff, but in New York City are it's a it's a tough market to break through.

SPEAKER_04 52:38

It is, it is a tough market. But there's so many different ways to invest. Yeah. Well, part of time you live you live in Brooklyn, right? Um, so currently I'm actually in Israel. So that's uh yeah. Kind of relocated and and living uh working remotely.

SPEAKER_02 52:57

Oh, very cool. Um I mean I've been to New York City a lot. It's it's such an exciting place. Um but uh I mean in Israel, I'm sure the weather is a lot nicer in the wintertime. Yeah, that's good. What part of Israel?

SPEAKER_04 53:14

In Jerusalem.

SPEAKER_02 53:16

Such a beautiful place.

SPEAKER_04 53:18

Very beautiful.

SPEAKER_02 53:19

Yeah. I remember when I was there and just like I've never seen a city like that. Just how story it was. And I ate at a restaurant, it was literally a hole in the wall. Not it was a wall with a hole.

SPEAKER_04 53:38

That's funny.

SPEAKER_02 53:41

Awesome. Well, hey, I'll let you thanks again. Um it's probably morning time where you are, right?

SPEAKER_04 53:48

And uh either late or early, depending on how you look at it.

SPEAKER_02 53:52

Okay, well, I'll lead you back to whatever you're doing and appreciate your your time, and um, we'll be keeping in touch.

SPEAKER_04 54:00

All right, awesome.

SPEAKER_02 54:01

Have a good one, Yona.

SPEAKER_04 54:03

Thanks so much.

SPEAKER_03 54:04

All right.