MB489: Keep More. Pay Less. Scale Faster. How Smart Investors Save Six Figures on Taxes with Cost Segregation - With Sean Graham

Financial Freedom with Real Estate Investing

Michael Blank

Business, Entrepreneurship, Investing

4.7 • 577 Ratings

🗓️ 15 September 2025

⏱️ 33 minutes

🔗️ Recording | iTunes | RSS

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Summary

If you’re serious about building wealth through real estate, you can’t afford to ignore the tax side. In this episode, CPA and active investor Sean Graham breaks down how cost segregation and bonus depreciation can save you (and your investors) tens or even hundreds of thousands in taxes—without changing your investment strategy. We cover how to use cost seg the right way, why most CPAs are doing it wrong, and what high earners need to know about the latest tax bill that could bring back 100% bonus depreciation. Whether you're a GP looking to raise smarter or an LP trying to boost after-tax returns, this episode is non-negotiable.

Key Takeaways

What Cost Segregation Actually Does for You

Reclassifies components of a property to accelerate depreciation over 5–15 years instead of 27.5 or 39.
Allows investors to take massive deductions in year one—sometimes more than the cash they put into the deal.
Creates phantom losses on K-1s that can offset other passive income or gains.

Bonus Depreciation: What It Is, and Why It Matters

100% bonus depreciation (introduced in 2017) allows investors to deduct qualifying property in year one.
It's phased down since 2023 but may return under new legislation.
Huge benefit for both LPs and GPs—particularly when paired with proper tax strategy.

Using Cost Seg to Raise Capital More Effectively

Smart GPs use depreciation estimates during the raise to attract savvy investors.
Many LPs care more about the tax benefits than the projected cash flow.
For deals over $1M, cost seg should be factored into your underwriting and pitch.

The “Look-Back” Strategy for Missed Depreciation

Allows owners to retroactively apply cost segregation—even years after purchase.
No need to amend prior tax returns; benefits can be taken in the current year.
Especially powerful when strategic timing aligns with real estate professional status.

Avoiding Common CPA Mistakes

Many CPAs aren’t familiar with real estate—leading to missed deductions and bad advice.
Make sure your tax pro understands real estate-specific strategies like bonus depreciation, short-term rental loopholes, and REPS.
Ask the right questions: Do they know how to handle depreciation recapture? Real estate professional status? IRA investing?

How to Work with a Cost Segregation Firm the Right Way

Involve a cost seg firm early—before closing—so you can plan ahead and market benefits to investors.
Studies typically cost $5K–$10K, but often result in six-figure tax savings.
Smaller properties can use a “condensed engineering study” for reduced fees without sacrificing IRS compliance.

For full episode show notes visit: https://themichaelblank.com/podcasts/session489/

Transcript

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0:00.0	Hey, dealmakers, welcome to the show where it's all about financial freedom with real estate.
0:04.1	Let's do this.
0:11.0	All right, in today's episode, we're talking with Sean Graham.
0:13.6	He's a registered CPA.
0:15.5	He's also an active real estate investor and founder of Maven Cost Segregation.
0:19.8	So if you want to learn about cost
0:22.4	segregation, what it is, and this is, again, both for active and past investors for both LPs and GPs,
0:28.5	you've got to know what cost segregation is. You've got to know what bonus appreciation is,
0:31.4	and you've got to know how to take advantage of it. If you're a past investor, obviously, for your own,
0:36.3	for your own tax savings, and if you're a
0:38.9	GP giving that benefit to your investors, because it's a huge benefit. It's really one of the
0:44.1	major reasons people want to invest in real estate is that depreciation. Sean's going to explain
0:49.7	what that is and why you should care. And so that's what we're going to talk about here.
0:56.5	And he's got some pretty good strategies. We also talk about the importance of working with a
1:01.6	CPA that understands real estate and why that's important. And what a lot of the mistakes that
1:06.6	people make, especially when they're new to real estate, they don't actually really take
1:10.2	advantage of this real estate, of the tax benefits because their CPA doesn't, is not familiar
1:15.2	with them. Or they might even think that something is not even allowed or not even possible.
1:19.4	And so understanding the tax benefits, specifically around cost segregation is very important.
1:26.3	Also, we had this bonus appreciation when Trump was
1:29.1	in office the first time, and there is a possibility might come back where we get 100% bonus
1:34.4	appreciation. What is that? What is the what is the possibility of that happening and when
	...

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MB489: Keep More. Pay Less. Scale Faster. How Smart Investors Save Six Figures on Taxes with Cost Segregation - With Sean Graham

Financial Freedom with Real Estate Investing

Michael Blank

Summary

Key Takeaways

Connect with Sean

Connect with Michael

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Transcript