Thread by @baldridgecpa

Owning a small business is still the best tax deal in America.

Owning real estate (as a pro) makes it tax-free.

Generate cash from your business.
Generate losses from your real estate.

All cash, no tax.

My client made $847K last year and paid $0.

Here's the exact blueprint:

The government incentivizes real estate development through ACCELERATED depreciation.

Buy a $2M building → Take $600K in deductions YEAR ONE.

McDonald's gets it: They own $40B of property.

Our clients get it too: Here's how have deferred $700M in taxes in the last 3 years:

First, understand the trap.

The IRS divides income into 3 buckets:

Active (your business)
Portfolio (your stocks)
Passive (your real estate)

Passive losses CAN'T offset active income.

Unless you qualify for one game-changing designation:

Real Estate Professional status

Three requirements:

750 hours/year in real estate
More than 50% of your work time
Material participation in the activity

Meet all three and your "passive" losses become ACTIVE.

Now they eliminate your business taxes.

Here's my client's exact numbers:

Business profit: $847,000

Property bought: $2.5M
Down payment: $500K
Cost segregation study: $5,000

Year 1 depreciation: $850,000

Tax bill: $0
Monthly cash flow: $6,500

Total return year one: 63%

Cost segregation is your weapon.

It breaks buildings down from one big structure into its components:

5-year property: Fixtures, carpets (10-15%)
7-year property: Equipment, furniture (5-10%)
15-year property: Land improvements (15-20%)

Total: 30-40% written off IMMEDIATELY.

Breaking: The One Big Beautiful Bill made this PERMANENT.

100% bonus depreciation. Forever. No phaseout. No sunset.

Every property you buy creates massive year-one deductions.

This used to be temporary.

Now it's the law of the land.

You just learned the WHAT (bonus depreciation).

Now for the HOW.

5 levers that multiply your deductions: Most investors accidentally pull 1-2.

You're about to intentionally pull all 5.

The difference is worth millions:

LEVER 1: Choose buildings over land

Land can't be depreciated. Ever.

$3M property in California (70% land): $900K building = $270K deduction

$3M property in Texas (20% land): $2.4M building = $720K deduction

Same price. Triple the deduction.

Buy where land is cheap.

LEVER 2: Hunt for equipment

More stuff = more deductions.

Basic apartment: 25% qualifies for bonus
Medical office: 40%+ qualifies
Gas station: 100% qualifies

Every appliance, fixture, and piece of equipment accelerates your write-off.

Complexity pays.

LEVER 3: Use leverage

The IRS doesn't care how much CASH you paid. They care what THE PROPERTY cost.

$2M building with $400K down = $600K deduction on $400K invested.

That's 150% return year one. From tax savings alone.

Let banks fund your deductions.

LEVER 4: Time it perfectly

Your deduction value changes with your tax bracket:

Make $200K (24% bracket): $100K deduction saves $24K

Make $800K (37% bracket): $100K deduction saves $37K

Wait for your biggest income years.

Then pull the trigger.

LEVER 5: Use the gift they gave you

We were watching bonus depreciation die: Was dropping to 40% this year. Would hit 0% by 2027.

The OBBB changed everything: 100% bonus is now PERMANENT.

The tax break of the century just became forever.

Don't waste it.

Common objection: "What about depreciation recapture?"

If you sell, yes, you pay some back.

So 2 options:

#1 - Don't sell. Ever.

1031 exchange into bigger properties
Refinance for tax-free cash
Hold until death (heirs get fresh basis)

Build an empire. Never cash out.

Option 2 - Plan for recapture

Recapture is real, but can be mitigated

You'll never pay more recapture than what you initially deducted, so what you are getting with the tax deferral is an interest free loan from the IRS.

Also, you can perform a study at the end to save.

"But I can't qualify as a Real Estate Professional!"
Three legitimate workarounds:

Buy your business building (direct write-off)
Short-term rentals under 7 days (counts as active business)
Non-working spouse becomes the RE Pro

One of these might work for you.

Real example from my files:
Doctor, $1.2M income:

Bought medical building for practice
Cost seg: $1.8M in year-one deductions
Tax saved: $666,000
Cash invested: $1M
ROI from tax alone: 66%

Plus rent saved, etc..

He worried he overpaid for the building.

He didn't.

You now know more about real estate tax strategy than 99% of investors.

Bonus depreciation is permanent.
The 5 levers are proven.
The blueprint is yours.

Every year you wait costs you six figures+.

Buy one property. Pull all five levers. Pay zero tax.

It's that simple.

My business partner @rledbetterCPA and I are hosting a webinar this Wednesday

We are going deep on the changes to real estate tax in the OBBB

Over 700 people are signed up.

Join us below!

We will send you the video even if you can’t make it.

lu.ma/4mestiq9

@rledbetterCPA The quickest way to see what you can save is to use our calculator at RE Cost Seg

recostseg.com/real-estate-de…

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Thanks for taking the time to read this.