The Tax Strategy that Saved a Real Estate Investor $93K in One Year

The information on this webpage is for general education purposes only and is not intended to be taken as tax or legal advice for any specific situation. Statements on this website do not guarantee specific outcomes for any client or potential client.

Depreciation deductions are one of the biggest tax benefits of owning real estate, but few investors realize just how fast they can access them.

For instance, working with FERVELL’s co-founder, Kyle, one real estate owner saved $93,000 in just one year using a little-known depreciation strategy. That’s thousands the owner could reinvest into their portfolio right away.

It all came down to a Cost Segregation Study, a tool that many investors and their CPAs overlook but that can have massive savings potential. 

Curious what the study is, how it became a game-changer for the client, and how we can help you put it to work? Keep reading.

What is a Cost Segregation Study?

cA Cost Segregation Study is a strategy that helps real estate owners access bigger tax deductions on their properties faster. 

Because buildings naturally lose value as they age, the IRS lets investors deduct a portion of that loss each year from their taxes. Normally, these deductions are spread out over a long period of time—27.5 years for residential properties and 39 years for commercial buildings.

That means under normal rules, only a small portion of the property’s value can be deducted each year. 

But a building isn’t just a single asset—it’s made up of many parts, like fixtures, flooring, or parking areas that wear down faster. A Cost Segregation Study separates these components and reclassifies them for faster depreciation. 

By doing this, deductions that would have taken decades to claim can often be taken in the first year, putting tens of thousands of dollars back into an investor’s hands. And in real estate, having that extra cash available right away can make a big difference.

How to Know if a Cost Segregation Study is Right for You

Not every property or investor will benefit equally from a Cost Segregation study, but if they do, the benefits are massive.

Here’s a few signs it might be worth exploring:

• You’ve recently purchased, renovated, or built a residential or commercial rental property.