How One Real Estate Investor Saved $150,000 Through Strategic Depreciation

Discover the hidden tax power of depreciation and how it can work for your business.

Taxes are inevitable, but overpaying them? That’s optional. If you’re a business owner or real estate investor, depreciation is one of the most effective tools to reduce your tax liability—legally and strategically.

Let me show you how powerful it can be with a real-life story.

A $150,000 Tax Win

Last year, a new client—a successful real estate investor with multiple rental properties—came to us for a second opinion on their tax situation. After reviewing their prior returns, we discovered they had completely missed out on key depreciation deductions for several properties.

We went to work:

• Amended their prior tax returns to claim missed depreciation.

• Ran a cost segregation analysis and accelerate depreciation for the current year.

• Applied strategic use of bonus depreciation and Section 179 for new property improvements.

  
  

The result? Over $150,000 in tax savings in one planning cycle. And that’s just the beginning—these savings will continue to stack up with proper planning.

What Is Depreciation Deduction?

Think of your business or investment assets—properties, equipment, even computers. These things wear out over time. Depreciation lets you deduct a portion of their cost every year to reflect that wear and tear.

For example, a $10,000 asset with a 5-year life might give you $2,000 in annual deductions. If you're a real estate investor, a building can be depreciated over 27.5 or 39 years—but there are strategies to speed that up.

Can I Accelerate Depreciation?

Yes! And you should, when it makes sense.

There are two main tools:

• Bonus Depreciation: Allows you to deduct a large portion (often up to 100%) of qualifying asset costs upfront.

• Section 179: Lets you write off the full purchase cost of qualifying assets in the first year, subject to limits.

For real estate professionals, combining cost segregation with these tools can unlock tens or hundreds of thousands in immediate deductions.

How Does Depreciation Lower My Tax Bill?

Depreciation reduces your taxable income. If your business earns $150,000 and you claim $50,000 in depreciation, you only pay taxes on $100,000.

More deductions = less taxable income = lower tax bill = more cash flow to reinvest.

Take Action

Depreciation is more than just an accounting entry—it's a strategy. If you're a real estate investor or business owner, the IRS offers tools to help you thrive. But they only work if you know how to use them.

Want to know if you're missing out on depreciation deductions? Or ready to accelerate your savings with a custom strategy?

Book a strategy session with LightUp Tax today—and let’s uncover the savings waiting inside your next tax return.

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