Bonus Depreciation and Cost Segregation with Gian Pazzia, Ep. 733

Gian Pazzia is a seasoned cost segregation expert and structural engineer who has spent over 25 years helping real estate investors unlock powerful tax strategies. As a former engineer at Arthur Andersen and current leader at costsegregation.com and KBKG, Gian has worked with everyone from small landlords to major casinos and Fortune 500 companies to help them accelerate depreciation and reduce their tax burdens.

 

---

 

📢 Announcement

Get 25% off your first two months with Hemlane’s property management software — visit hemlane.com and use the promo code: multifamilypodcast25.

 

---

 

Key Takeaways

• Cost segregation allows investors to accelerate depreciation and unlock large tax deductions—sometimes up to 25% of the property’s value in year one.

• Bonus depreciation is currently at 40% but may return to 100% in 2025 with bipartisan support.

• Software-based cost segregation now makes it accessible for small residential investors at a fraction of traditional costs.

• Strategic timing of sales and 1031 exchanges is key to avoiding tax recapture issues.

• Estate planning considerations can influence whether and when to use cost segregation.

 

---

 

Topics

Understanding Cost Segregation

• How accelerated depreciation breaks down building components into shorter tax lifespans.

• Common items eligible for faster write-offs include appliances, vinyl flooring, wiring, and driveways.

Bonus Depreciation and Legislative Changes

• History of bonus depreciation and the anticipated 2025 revival to 100%.

• How changing percentages (e.g., 60% to 40%) affect timing strategies for investors.

Cost Seg for Small Investors

• Introduction of software at costsegregation.com for properties with six units or fewer.

• Investors can complete a study in under 15 minutes for about $500.

1031 Exchanges and Depreciation Recapture

• Misconceptions around available depreciation post-1031 exchange.

• Case study examples of how remaining basis affects new depreciation schedules.

Estate Planning Implications

• Why it’s smart to use cost seg now if you expect a step-up in basis later.

• Untapped depreciation is lost if unused before the estate passes.

Common Mistakes in Cost Seg

• Failing to account for recapture when flipping in under 3 years.

• Not verifying provider credentials—look for certified cost segregation professionals.

 

---

 

📢 Announcement

Make sure to download our free guide, 7 Questions Every Passive Investor Should Ask, here.

 

---

 

Round of Insights

Failure that set Gian up for success: Getting complacent during early success, now stays focused on innovation and competition, especially with tech advancements.

Digital/Mobile Resource: ChatGPT — now used internally with integrations across SharePoint and Outlook.

Book Recommendation: The Five Dysfunctions of a Team by Patrick Lencioni — great for building leadership teams and partnerships.

Daily Habit: Maintains handwritten lists and reprioritizes regularly to stay focused on da