The Cost Seg/1031 Exchange Combo is Even More Important Under Tax Reform

The Cost Seg/1031 Exchange Combo is Even More Important Under Tax Reform

Under the Tax Cut and Jobs Act, the benefits of combining cost segregation and Section 1031 exchanges have become an even more important tax strategy for real estate investors. With the recently passed TCJA, the rules for Section 1031 exchanges have been modified and depreciation rules have been expanded. The interplay of these new rules creates new opportunities that one might overlook — namely, the ability to utilize a cost segregation study to identify short life assets that will be fully depreciated and ultimately retired. The no-value assets are then not considered to be a part of the Section 1031 exchange – resulting in no depreciation recapture tax.

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