Cost Segregation with Nathan Resnick

In this weekend edition of The Real Estate Espresso Podcast, host Victor Menashe interviews Nathan Resnick, partner at Cost Segregation Guys, about the strategic advantages of cost segregation in real estate investing. Nathan shares his journey from a software executive to a real estate investor and tax strategy expert, emphasizing how cost segregation accelerates depreciation—especially with the current 100% bonus depreciation—unlocking immediate tax savings and improved cash flow. He explains that while bonus depreciation typically offsets passive income, married couples filing jointly can leverage a spouse’s real estate professional (REPS) status to offset active income, making it a powerful tool for high-income earners like doctors and lawyers. Nathan also addresses common misconceptions, such as recapture tax on short-term holdings, advocating for 1031 exchanges to defer both capital gains and recapture. He stresses that while depreciation is a valuable benefit, it should never override strong deal fundamentals, echoing the principle that 'the tax tail should not wag the investment dog.' The episode highlights practical strategies, including using fourth-quarter capital expenditures to reduce tax liability, and underscores the importance of engineer-based cost segregation studies to accurately classify assets by useful life (5-, 15-, or 27.5-year property). Nathan warns against chasing depreciation at the expense of return on investment, noting that while car washes and laundromats offer high depreciation, their low cap rates may not justify the investment. The conversation concludes with actionable takeaways: prioritize deal fundamentals, use cost segregation as a tax efficiency tool, and consider REPS status for tax optimization. Nathan invites listeners to connect via costsegregationguys.com or his personal email.