Surprising Strategy Pros Use to Lose Real Estate Money
Depreciation and Cost Segregation
Depreciation is a non-cash expense that real estate investors can use to reduce taxable income. By accelerating depreciation through cost segregation, investors can increase their tax deductions, effectively using paper losses to improve cash flow. This method involves breaking down the components of a property to identify assets that can be depreciated over shorter periods, such as five or seven years, rather than the standard 27.5 years for residential properties2.