State Conformity to Federal Bonus Depreciation

Instructions and help about 2023 3885a form

hello and welcome to today's video we're going to talk about cost segregation and bonus depreciation in non-conforming States specifically focusing on California let's start by understanding the basics cost segregation is a tax planning strategy used by Real Estate Investors to accelerate their building's depreciation this increases their current deductions reducing their taxable income under normal circumstances real estate assets depreciate over 27.5 years for residential property and 39 years for commercial property but with cost segregation certain components of the property can be depreciated over 5 7 or 15 years this gives you larger deductions in the early years now what about bonus depreciation this is another tax strategy that allows you to depreciate a large percentage of qualifying property in the year it was placed in service that's a big tax break let's take a look at an example here is a quote for a 950 000 property if you elected to bonus the personal property you can re