Wake Up to Wealth – Episode Summary

Podcast Title: Wake Up to Wealth
Host: Brandon Brittingham
Guest: Jeff Hyatt (“The Depreciation Doctor”)
Episode Title: Unlocking Real Estate Wealth – Cost Segregation Explained
Date: December 19, 2025

Episode Overview

This episode dives deep into the misunderstood world of cost segregation—a powerful tax strategy that real estate investors can use to accelerate depreciation and significantly lower their tax liability. Host Brandon Brittingham welcomes expert Jeff Hyatt, who demystifies cost segregation, shares real-world examples of its impact, and explains recent tax code changes that make this tactic even more advantageous. Listeners get actionable insights, concrete scenarios, and guidance on how to unlock substantial wealth-building strategies in real estate.

Key Discussion Points & Insights

Understanding Cost Segregation (03:11–07:18)

• The Problem:
  Most investors default to straight-line depreciation (27.5 or 39 years) because they or their CPAs lack deeper tax strategy knowledge.

  • “What most people, 70% of the people out there end up with is 27 and a half or 39 year depreciation. And it doesn't have to be that way.” – Jeff Hyatt [03:22]

• The Solution:
  Cost segregation allows you to “carve out” portions of a property (e.g., fixtures, landscaping) and depreciate them over a shorter period (5, 7, or 15 years), vastly accelerating your tax write-offs.

• How It Works – Example:

  • Buy a $500,000 duplex (not counting $100k land, so $500k depreciable).
  • Roughly 15–25% of the property’s value can typically be accelerated.
  • This can result in an immediate $100,000 deduction against income.
    • “Somewhere between, well call it 100 grand of the purchase price can be accelerated into the faster life. And Brandon, you would get to take an immediate deduction of 100 grand from that.” – Jeff Hyatt [06:36]

• Impact:
  This strategy can be used on multiple properties, “stacking” deductions for huge tax savings year over year.

Why Most People Miss Out (09:30–11:06)

• Lack of Knowledge Among CPAs:
  Many CPAs aren’t up to speed on cost segregation, which means even high-income professionals don’t leverage it.
  • “Most clients, most people who buy properties, about 70% of them don't even know about this, don't use it, because they just haven't heard about it.” – Jeff Hyatt [08:59]
• When It Makes Sense:
  Generally, cost segregation is worthwhile on properties valued at $300,000 and up, though some investors may apply it to smaller properties if they have the right financial team.

Passive vs Active Income: Real Estate Professional Status (11:06–14:27)

• Passive Income Investors:
  • Losses from cost seg only offset rental/passive income.
• Real Estate Professionals:
  • If you spend 750+ hours/year—and at least half your time—in real estate, losses can offset active income (e.g., from W2 or other businesses).
    • "If they're a real estate professional...not only would the losses go to offset income from the apartments, any excess loss would spill over and wipe out their income tax on their day job income." – Jeff Hyatt [12:00]
• Short-Term Rentals:
  • Owners actively involved in short-term rentals can use cost seg losses to offset active income, too—sometimes referred to as the “short term rental loophole” (Hyatt calls it an “advantage”).

Why It’s a Game-Changer (07:42–08:33)

• Wealth Building:
  • Trump’s famous tax strategy mentioned—using the tax code to create “paper losses” and shelter huge amounts of income.
    • “He used the cost segregation to create that loss, which hedged against his taxes, which is what wealthy people do.” – Brandon Brittingham [08:16]

Recent Tax Code Changes & The “Big Beautiful Bill” (15:44–20:20)

• Bonus Depreciation Fundamentals:

  • Before 2017, bonus depreciation was generally only available for new construction.
  • The Tax Cuts and Jobs Act (2017) allowed “bonus” depreciation for used/existing property, making cost segregation even more powerful.
  • Retroactive update (OB3 bill, July 2025):
    • 100% bonus depreciation is BACK for properties placed in service after Jan 20, 2025.
    • “So it was 100% bonus on any project property put in place after 1/20 of 25. And it's permanent now.” – Jeff Hyatt [18:45]

• Qualified Production Property:

  • New incentives for US manufacturing: 100% bonus depreciation for all new spending in production facilities.

Advanced Strategies & Special Property Types (21:46–27:46)

• RV & Mobile Home Parks:

  • These properties typically offer even higher cost segregation benefits (often 30%+ due to infrastructure and outdoor assets).
    • “We are in the process of buying a $1.3 million mobile home park right now. And I think you told the, the cost seg was somewhere around 470,000.” – Brandon Brittingham [22:14]

• Climate-Controlled Self Storage:

  • Higher proportion of components for cost seg due to units, roll-up doors, security, HVAC, etc.

• “Place in Service, Then Demo” Strategy:

  • With the right tax election (“GAA” – General Asset Account), you can start depreciation before demolishing a property and not lose the write-off.

Retroactive Cost Segregation (28:23–29:28)

• Yes, You Can Go Back:
  • Cost segregation can be performed retroactively—back to 1986—typically for any property acquired or improved in the last 10–15 years.
  • No need to amend prior returns; rules allow for a change in accounting method (“Form 3115”).
    • “You can step back in time without amending your tax return and grab that depreciation in the current year...For cost segregation, there's a thing called a change in accounting method you can use.” – Jeff Hyatt [28:28]

Real-World Adoption: Still Underutilized (29:49–30:56)

• Surveys Show Few Investors Use Cost Seg:

  • Of 40 investors in a seminar, only 3 knew about cost seg, and just 1 had used it.
    • “Probably 25 of them owned their own investment properties. And three of them knew about cost seg. Only one had used cost Seg.” – Jeff Hyatt [29:49]

• Alternative to 1031:

  • Cost seg can be used to offset capital gains from selling property, reducing or eliminating the need for a 1031 exchange.

Notable Quotes & Memorable Moments

• “This is a freaking like game changer to help preserve wealth.” – Brandon Brittingham [07:42]
• “If the rules are there and allow this, why wouldn't people do this?” – Jeff Hyatt [08:22]
• “So for me…the money thing is part of the wealth conversation, but somebody that's really wealthy has done stuff to help other people.” – Jeff Hyatt [33:15]

Useful Timestamps (MM:SS)

• 03:11–04:49 – What cost segregation is and why most people don’t use it
• 05:41–07:18 – Simple real-life example: accelerated depreciation for a $500k property
• 08:16–08:33 – Reference to Trump using the tax code (cost seg) in a presidential debate
• 11:06–13:36 – Active vs. passive income, real estate professional status, and what counts
• 15:44–19:08 – Bonus depreciation history, the Tax Cuts and Jobs Act, and OB3 update
• 21:46–24:39 – High-depreciation property types (mobile home/RV parks, self-storage)
• 25:19–27:46 – Advanced tactic: keep depreciation if you “place in service” then demolish
• 28:23–29:28 – Can you do cost seg retroactively? (Yes!)
• 29:49–30:56 – Real-world survey: most people still aren’t using these strategies
• 33:12–34:45 – What “waking up to wealth” means to Jeff Hyatt

Resources & Contact

• Contact Jeff Hyatt (“The Depreciation Doctor”):
  • Instagram: @depreciationdoctor
  • Facebook: Jeff Hyatt (search or follow link in show notes)
  • Email: JDH at Cost Seg Studies (exact address in show notes)

Wake Up to Wealth Takeaways

• Cost segregation is crucial for real estate investors aiming to build wealth and pay less tax.
• Despite its power, cost seg remains underused due to lack of awareness—even among professionals.
• Recent tax law changes make it better than ever—especially with 100% bonus depreciation back in play.
• Have properties already? It’s not too late—retroactive cost seg could mean big immediate savings.
• Work with an expert—many CPAs are not up to speed; Jeff Hyatt is recommended by Brandon.
• “Stop giving the government all your money and reach out to someone like Jeff that can help you not give them all of your money…” – Brandon Brittingham [34:45]