Jeff Hiatt, known as the Depreciation Doctor, explains how cost segregation lets real estate investors take bigger tax write offs now instead of waiting 39 years, including deductions they missed on properties they already own. In this episode, he covers what actually qualifies, when it does and does not make sense, why virtual site visits can trigger an IRS audit, and how a 1031 exchange keeps the tax savings working toward generational wealth.
Episode 36: Accelerating Depreciation and Building Wealth with Jeff Hiatt
What if a real estate deduction could help you build wealth today instead of arriving decades from now? Jeff Hiatt, known as the Depreciation Doctor, explains how cost segregation can accelerate allowable depreciation, reduce current taxable income, and free capital for an investor’s next opportunity.
In this episode, Mike and Zach talk with Jeff about the strategy he has worked with since 1999. He explains why many eligible property owners never use cost segregation, how a study separates structural components from shorter-life assets, and why deductions may still be available even when a building has been owned for years.
Jeff walks through the details investors need to understand, including residential versus commercial depreciation periods, recapture, 1031 exchanges, step-up in basis, and the circumstances that can make a study worthwhile. For his firm, properties above roughly $300,000 often begin producing a compelling benefit-to-cost ratio.
The conversation also covers why specialized knowledge and a qualified physical site visit matter. Parking lots, drainage, landscaping, specialty wiring, HVAC, and other improvements contain layers of value that can be missed by a quick estimate, while unsupported virtual approaches may create serious audit risk.
Jeff also shares his work with Swim With A Mission, a New Hampshire nonprofit that raises money for veterans and their families. Through events involving Navy SEALs, team building, and mental toughness, participants gain perspective on adversity while supporting those who served.
“Would you rather have a deduction today, or would you rather wait 39 years to take that deduction?”
“Seventy percent of the people that could use cost seg don’t.”
“That’s like an interest-free loan for X number of years.”
“If we lose a contract or lose a client, it’s not a great day—but we didn’t lose a leg.”
Jeff Hiatt is known as the Depreciation Doctor and has worked with cost segregation since 1999. His firm helps real estate owners identify faster depreciation opportunities that may reduce current taxable income and improve the capital available for future investments.
Jeff entered the field after working with national franchise groups and learning how cost segregation could benefit clients who owned real estate. An early seminar for the Massachusetts Society of CPAs helped expand the practice from a handful of annual projects to hundreds.
Today, Jeff’s team completes approximately 1,500 to 1,600 studies per year and has worked on nearly 28,000 properties. The firm conducts physical site visits, prepares fixed-fee studies, and helps clients and their CPAs understand how to implement the results in their tax software.
Jeff also serves on the board of Swim With A Mission, which raises money for veterans and their families. Since its founding in 2017, the organization has raised approximately $18 million through events designed to build connection, perspective, teamwork, and resilience.
Learn more at DepreciationDoctor.com, email jdh@costsegstudies.com, or support veterans through Swim With A Mission.
For Investors & the Fund – Learn how the Fund works and book a call
For Borrowers & Deals – Get funding and support for your next investment
Jeff Hiatt (0:00)
If they're a fix and flip, probably not going to work. If they are only going to hold the property for a year or two and and I say and with capital letters there and not do a 1031, then it probably doesn't make sense. But for most people that are interested in reducing their tax bite, that are interested in using that money constructively versus sending it to DC, this can make all the sense in the world, just if they can deploy the money and not waste it on silliness.
INTRO (voiceover) (0:34)
Most people think saving money is the answer, but the truth is saving only gets you to zero. Join Mike and Zach as they flip the script from saving to earning. from zero to unlimited potential. Welcome to Save to Zero.
Mike Seidl (0:52)
Okay, everybody, thanks for tuning in. This is episode number 36 of the Save to Zero podcast. Today, we're very lucky to have on Jeff Hayyatt. He is known as the depreciation doctor. He joins us to discuss practical approaches to understanding income tax reduction, the role depreciation can play in financial planning, and how to stay uh motivated while building your internal life and your business. So, Jeff, thanks for coming on. We appreciate you taking time out of your schedule to be with us. Tell us uh from a 50,000 foot view, what you got going on, buddy?
Jeff Hiatt (0:52)
Hey, so uh we've been doing uh this whole depreciation uh tax thing since uh 96. I joined in 99 and we've really kind of got it got it moving quite nicely now. We do a lot of work with CPA firms that refer us business, but then also real estate agents and brokers and also bankers, people that know folks that are buying uh transactions, buying real estate that want to, like you say, build wealth, not pick up nickels and dimes. They want to be picking up thousand bills. So what our service does is allow them to do that because instead of just taking the standard approach of straight line depreciation, the tax code will allow them to take faster write offs. They just have to know how to do it and that's what our work with does.
Mike Seidl (2:24)
Fantastic. So you said you've been doing this since 99. What did you do before this that led into this? And when did you become known as the depreciation doctor? And where is your white coat and stethoscope?
Jeff Hiatt (2:36)
Yes. Yes. Well, you know, stethoscope is on the logo.
Mike Seidl (2:42)
Okay.
Jeff Hiatt (2:43)
So, uh, so from I'll call it 94 to 99, I was doing a lot of work with franchise groups. So, you know, think the big doughnut companies that are national, the big that sell coffee, you've got the big pizza places that deliver, and you've got uh the Mexican food chain. So, we were doing a lot of work with those folks. And interestingly enough, this young CPA who had done his internship with my now partners uh out in u the Buffalo area, he was moving to Boston to continue dating my sister-in-law and at a family barbecue. He said, "Jeff, you're doing all this work with these franchise groups. You should be talking about cost seg." And I said, "What's that?" And he goes, "It's faster write-offs for real estate." And I said, "No, it sounds boring. Not interested." And he goes, "No, if your clients, if these guys own real estate, they're going to be into this cuz they don't have any other write- offs." And I was like, "Oh, man." I had to be polite cuz I he was dating my sister-in-law. Second, leave me alone. So, I was polite and I said, "Okay, let me talk to the let me talk to these guys." And I asked them all as I said I would and they were all into it. They were all like, "Oh my gosh, that would be amazing. How would we do that?" And I said, "I don't know. I know a guy that knows about this." And so we started doing five or 10 projects a year. And that was from 99 until about 02. In an O2, we got referred to some guys that were buying a big couple of properties from a defense contractor and we saved them about $4 million of income tax and their CPA said, "Wow, you know, everybody was thrilled about it." And the guy's CPA said, "Hey, you should do a seminar for the the Mass Society of CPAs." And I said, "Okay, how would I do that?" And he goes, "I'm on the board. I'll get you in." So, he got me in. And we did a seminar and 85.
Zach Richards (5:04)
Isn't it great when you know a guy?
Jeff Hiatt (5:06)
Yeah. Right.
Mike Seidl (5:06)
Exactly. You know a guy that can actually deliver.
Jeff Hiatt (5:06)
And he did. And I give him credit for it every time I see him. I'm like, "Thanks, Ron. You're the man. Um, but uh we we did that seminar in February.
Mike Seidl (5:21)
Excuse me. Thanks, Ryan. You're the man. The doctor is in the house.
Jeff Hiatt (5:26)
He laughs at at this whole branding thing, but uh that's cool. So, um anyway, we did that seminar, 85 CPAs came and we went from doing five or 10 projects a year to doing a couple of hundred. And now we do 1,500 to 1,600 a year. We've got about 38 folks on staff that do the site visits and all that stuff. So, um, we have a lot of fun doing it.
Mike Seidl (5:51)
Fantastic.
Jeff Hiatt (5:51)
We're tax dorks, but we love doing it.
Mike Seidl (5:55)
So,
Zach Richards (5:55)
yeah, that's awesome. So, at at the beginning, you said in your intro, you need to help people with income tax reduction. We've kind of narrowed it down now that you're talking about cost seg. So, a lot of people, you know, probably have some misconceptions or don't understand how it works. like what are some of the biggest misconceptions that you have to clear up with people when they ask you about it?
Jeff Hiatt (6:16)
So for those CPAs who didn't attend that seminar back in the day, many of them think, "Oh, well there there is no option." So they think of Zach or they think of Mike as you guys do lending and they don't think of you guys as real estate investors per se. Like maybe they think of their client as the attorney or the dentist. not connecting the dots that they're actually real estate investors, too. And depending on what that CPA or that advisor's client base looks like, they may never go to a real estate focused seminar. So, they don't even know this exists. 70% of the people that could use cost sec don't.
Mike Seidl (7:04)
Wow. In other words, only 30% of the population knows about it and uses it.
Zach Richards (7:09)
Wow.
Jeff Hiatt (7:10)
And so that gives us, you know, the opportunity to serve a lot of people. And the beauty of that is their misconception is they don't know about it at all. And so then we educate them about it or at least bring them up to speed a bit and they go to their accountant and the accountant says, "That's not right. You can't do that. Oh, you get audited. Oh, you know, you you're you're going to take all your depreciation now and you're not going to have any later or you're going to have to give it all back. You'd never be able to sell. And there and it's just not right. And so, uh, when I go through and take apart those suppositions or those statements, then the client goes, I think I need a new CPA. And I'm like, well, you're probably being underserved, so that might be a good idea.
Mike Seidl (8:01)
Okay, this is the last reference I'm gonna make. You surgically go in with your scalpel and you take out those inaccurate statements and you and you you you put in the correct ones and then they heal and they go on and they're attacks happy.
Zach Richards (8:16)
Did you stay up all night thinking of these references here?
Mike Seidl (8:20)
I just made it up.
Jeff Hiatt (8:20)
He he's he's been he's he's drinking some of that coffee from uh that client of mine that owns all those coffee shops.
Zach Richards (8:34)
That's crazy. I almost
Mike Seidl (8:36)
I almost owned four of those back in uh 2001 uh in their largest market in the country. The the issue for me is that and for them was that they know how to sell franchises. They don't know how to sell existing ones. and they were pulling the licenses from two people and we were going to get the four stores together and then within a year open up another one and they were all within a mile and a half of each other and they were all rocking it which was very interesting but okay back to the depreciation doctor. Go ahead, Zach. Sorry to steal.
Zach Richards (8:36)
No, you're good. So the misconception is seems like one they don't even know about it and then two when they finally find out about it they think it's illegal. it's going to get them audited or they're scamming the government or whatever and it's just not a thing. Is that that accurate?
Jeff Hiatt (9:28)
That's absolutely accurate. Yeah. And and the beauty is even if they didn't do the cost seg before, so they've owned the property for five or 10 years now and they've never done a cost seg, they're allowed to step back in time and grab the deductions they could have taken but haven't yet taken. So we help them go back
Zach Richards (9:49)
without amending. So you don't have to
Mike Seidl (9:53)
Okay.
Jeff Hiatt (9:54)
Yeah. Yeah. So um amending would only allow you to go back three years, but as a technical point you can go back to 1987.
Zach Richards (10:04)
Wow.
Jeff Hiatt (10:04)
Typically you won't go back that far. You'll only go back 10 or 15 years typically. But um you can as a matter of law and technically go back to 87.
Zach Richards (10:18)
That's huge.
Mike Seidl (10:19)
Okay, let me circle back because some of our audience is going to be newer and you're kind of blowing people's minds here. I'm sure if you're telling me that 70% of people can do this and they don't and their CPAs are saying that it's something you can't do or you're going to end up in an orange jumpsuit in Walpole. Can you explain what cost segregation is and who's going to benefit from it? Obviously, real estate people. So, I got that. If there's anyone outside of real estate, but also again, can you explain cost segregation? And feel free to geek out on it because people are going to want to know.
Zach Richards (10:54)
This is money, so they'll listen.
Jeff Hiatt (10:56)
Okay, fair enough. Let's let's dance. Um, if I said to you guys, Mike and Zach, hey, would you rather have a deduction today or a write off today, or would you rather wait 39 years to take that deduction?
Mike Seidl (11:15)
39 years, definitely.
Jeff Hiatt (11:18)
Yeah.
Zach Richards (11:21)
How about my money now? Now,
Mike Seidl (11:24)
of course. Yeah. Exactly. Yeah. Take it now.
Jeff Hiatt (11:26)
Right. Right. And most people if you when I ask them that they'll say, "Jeff, I don't know if I'm gonna own the building then because to go back to Mike's statement, this is for real estate." So it's not for other stuff. It's for real estate ownership is typically it. But they don't know if they're going to own the building in 39 years. If it's an apartment building, it's 27 and a half. I got to say that because you will get comments that this guy didn't know what he's talking about. I own apartments and it's 27 and a half. So apartments are 27.5. like whatever it's let's go with 39. So they say don't know if I'm going to own it. Don't know what the tax code's going to be then. I don't even know if I'll be alive in 39 years. So Mike, you and I would say that. Zach is still young enough he's like, "Oh, I'll be alive in 39 years." But um us old guys would say, "I probably won't be alive."
Zach Richards (12:19)
Whoa, whoa, whoa. Speak for yourself.
Jeff Hiatt (12:22)
Okay, fair enough. Um, but the scenario is once you've made that statement, you get to decide then, okay, so if I can take some of it now, I will. You're not going to take it all now, but you can take somewhere between 15 and 25%. earlier. And so when what the tax code allows you to do is identify specifically the items in the building that are I'm going to say this is air quotes um not structural. So the not structural stuff can go into a faster life. That might be, you know, depending on the flooring that's down, whether it's carpet or removable tiles, VCT, if it's got if the place has trim around the windows, window treatments, wiring for specialty items like monitors on the walls and computer systems and things like that. Or maybe it's a manufacturing facility with pneumatic lines in the cement. Um, so anything that is I'm going to say again air quotes not structural inside the building is going to be fiveyear or seven-year life.
Mike Seidl (13:39)
Okay?
Jeff Hiatt (13:39)
And anything outside of the building from basically the edge of the physical structure of the building to the property line is going to be 15-year life. And so you pile up all those values in the middle of the room and at the end of the conversation we say that there's somewhere between 15 and 25% that is in that into those categories and now you get to take a deduction today versus 39 years from now or 27 and a2. What that does is give you a bigger write off now reduces your taxable income. You pay less income tax, less money gets sent to Washington DC. And now, like you're saying, save to zero. You want to have that money and now you get to redeploy those $100 bills or thousand bills and you get to go buy your next property. So you can take that and help yourself build generational wealth and enable yourself to get more properties more quickly.
Mike Seidl (14:47)
Okay. So then this is a question that comes up to me comes up into my head is because you said they may not own it in 39 years. They may not own it in 10 years, 5 years, whatever the case may be. What happens if they have taken this cost segregation and it's 15 years uh that they've taken and they sell the building in seven years. So what happens with that extra 8 years?
Jeff Hiatt (15:14)
Well, for the most part, a lot of people end up with real estate in their DNA and in their blood, and they're not going to just sell this, take the money, and run. Now, maybe they will. I'll cover that in a moment. But usually they're going to do a 1031 into the next property.
Mike Seidl (15:34)
Okay?
Jeff Hiatt (15:34)
So when they do the 1031 to defer the tax on the gain that they had, so they bought it for a mill, they're selling it for 2 mil. They're going to roll that gain, not pay tax on it today, roll it in at 10:31 and go buy the next property. Well, when they do that transaction with 1031, bam, not only are they deferring the tax on the gain, they're also deferring what is called recapture. So, that kicks it down the road. And the real game, again, according to your your premise here of trying to help people get bigger picture, get more generational wealth created. the the big win is to keep doing 1031 until that buyer croaks and then it goes to generation two and there's a step up in basis and the whole 1031 thing evaporates. The whole recapture thing evaporates and now generation 2 gets those properties or property at the stepped up basis and they can do a cost seg at that time.
Mike Seidl (15:58)
Okay,
Jeff Hiatt (16:40)
but let's say they hate 1031 and let's say there's no way my grandpa tried to do a 1031 and blah blah blah. There's some reason they're not going to do a 1031. They're going to just take the money and run. Well, their accountant's going to have to figure out what the recapture bite is. So, some of that tax benefit you got out of it will have to be paid back. Now, that doesn't keep you from selling it. Remember, you bought it for a mill, you're selling it for 2 mill, but you're not doing 1031. And let's say we saved you, we got you 200 grand of deduction on that million. So, we got you a 20% greater deduction than you would have gotten otherwise. And so, you're five or eight years later, you've had that money in your world. You've bought other things with it. Hopefully, it was properties, but I don't care. or it could be a boat, whatever it is. You could have gone to Foxwoods, but um you're going to have to give some of that back now. You're still making a mill. You're a mill up. And if you have to give back a little bit, oh well. Most people, if they understand what it looks like, they go, "Oh, well that's fine. I'm not going to not sell because I'm going to have to give back some of that tax savings I got five or seven or eight years ago."
Mike Seidl (18:02)
Yeah. You're still ahead. your way.
Zach Richards (18:05)
And that's like an interest free loan for x number of years.
Jeff Hiatt (18:08)
Yeah, that's what it is.
Mike Seidl (18:09)
That's that's better than a 0% credit card. You've got this money you can use. You're gaining on that money and then you're giving it back. But thank you, Mr. IRS. Thanks, Uncle Sam. I appreciate that uh free loan for a couple years.
Jeff Hiatt (18:23)
That that is it.
Mike Seidl (18:26)
Sweetness.
Zach Richards (18:27)
Very cool. So, what types uh is there a size building that this works for? And or what size building does this make sense for and what size building does it not make sense for?
Jeff Hiatt (18:41)
For us, what we've done because we've done now pushing on 28,000 of these. Um, we could set I know we're really boring at parties unless you own real estate and then we're the coolest kids in the in the place. Um, but we were what what I found most of our team and most of the people in this industry were uh were in the chess club in high school. You know, we were the dorks. Uh the football players beat up on us. Um
Zach Richards (19:10)
software engineer, stuff like that.
Jeff Hiatt (19:12)
Yeah, exactly. Any any one of us in the in these categories. Gotcha. So, um, what we find is that if a client is looking at a proposal, they'll usually look at it and say, "Okay, if I spend a buck, how much am I going to save?" That's ultimately the question. That's the driver.
Zach Richards (19:32)
Sure.
Jeff Hiatt (19:33)
And for us, what we find is that as long as they're looking at about a four or five to one value proposition, they pay a dollar we're going to give them at least $4 or5 in tax benefit. They usually go ahead.
Mike Seidl (19:52)
Yeah.
Jeff Hiatt (19:52)
And what we find they go ahead and they we get that ratio for them if their property value the property the price they paid for the property is north of 300 grand. So, if they paid more than 300 grand to buy a building, to build a building, or to renovate it, it's going to make sense for them, and they'll be excited about it. And once you get above 300 grand, you get to a million, it's not four or five to one, it's more like seven or eight one. And you get to 5 million and it's 25 to one. and you get to 10 million and it's even I mean the numbers just go up but the starting point is usually about 300 grand and there are many places in the country I say this somewhat jokingly but it's kind of somewhat not joking you can't even dig a hole for 300 grand
Zach Richards (20:47)
sure
Jeff Hiatt (20:48)
you know you're talking about you know just the permitting fees and all the other fees so once absolutely you're above certain property types It's probably going to make sense.
Mike Seidl (21:01)
Well, I'm glad you gave me that number. I didn't know 300 was a starting because now I've got another tool in my toolkit for the investors that we deal with.
Jeff Hiatt (21:07)
Absolutely. So, now just just to put it out there because I know um some of your folks might be, you know, fixing and flipping and if they're fixing and flipping, then this probably doesn't help because they're not owning it long enough. Right. So just so you asked that that was part of your question was where does it work and where doesn't it work?
Mike Seidl (21:29)
Right?
Jeff Hiatt (21:30)
If they're already losing money and they're not paying income taxes, it doesn't make sense for them to pay us to make their tax law deeper.
Zach Richards (21:41)
Yeah. So we talked about like the type of property that this kind of works for and I guess the question is seems pretty straightforward, right? like okay I just bucket the different components of my property into these different you know tax categories and all that like you mentioned you know going to the property and I assume you have to use like engineers or something like where like where's the complexity here for people that they might not really understand what they're missing when they say oh this sounds pretty easy I can do it myself
Jeff Hiatt (22:16)
and that's
Zach Richards (22:16)
and I'm sure it's not the case that's why I'm asking yeah
Jeff Hiatt (22:20)
exactly Well, the so to kind of break it down, uh I mentioned earlier the structural components or the the physical structure, the loadbearing if you will elements of the building are the items that are going to get the 27 12 or 39 year and those would include the walls, the windows, the doors, the roof, the HVAC, plumbing for the bathroom, and electrical for basic lighting. Okay. Other than that, it's not structural. Okay. So, then you get into the five-year and the seven-year and the 15-year and you go, okay, so what? Well, people think, okay, outside of the building, what's it going to be? Uh, there's a driveway. Well, yeah, but what's under the driveway? Well, there's compacted gravel and soil under that to support the asphalt. And then you've got curbing, whether it's granite curving or the compressed asphalt curving. And then you've got irrigation systems. But you don't just have irrigation systems. You have the trenching and back fill that needed for that irrigation system to lay in. And then you've got outdoor lighting. And so you have trenching and back fill and compacted soil on top of that. So you've got the conduit underneath to take the electricity to the light post that's 50 ft out from the house or the property. You've got signage. You've got fences, rip wrapped walls, drainage, um covert. Basically, anything that a person has put in place. It could be the um planting uh beds and the shrubs and the trees around the property. So, you can't take a forest, but you can take the trees that were part of a planting plan. Um, that's outside, but you don't want to miss, you don't want to go, I think it's uh the asphalt was uh 15 grand and I'll take a grand for the compacted soil underneath. Well, then you're you're missing the whole point, which is to grab as much and extract as much benefit as from the property, not just winging a number. Um, and that's where some I would say some advisers out there, some accountants would go, "Zack, we got you don't need to do a cost seg. Look at you spent 15 grand on that asphalt. That's 15ear property. You don't need Hyatt. Well, you just missed everything else."
Mike Seidl (24:36)
He took the easiest of the easy.
Jeff Hiatt (24:59)
Yep. And and then he and then oftentimes what those CPAs would say is and we're being aggressive,
Zach Richards (25:07)
you know, they're not being aggressive,
Jeff Hiatt (25:09)
you know, because they missed so much. Um,
Zach Richards (25:13)
which which Okay, cuz like as I thought like, yeah, you got a parking lot. I didn't think about all the other stuff below it like you just mentioned. So that you're right, that makes a lot of sense.
Jeff Hiatt (25:22)
Well, think about this. you bought, let's say you bought a parking lot in whatever city and you're thinking and your accountant is probably going to tell you, "Oh, well that pay for parking space parking lot is just land, Zack. You just bought a piece of land." Well, you didn't cuz you've got asphalt. You've got um
Mike Seidl (25:45)
you've got the stripe that pre you know prevents people from driving out the wrong way that their tires.
Jeff Hiatt (25:51)
You got that whole thing. You got the gate, you got the guard house, you got lighting and fencing, and it goes on and on and on.
Mike Seidl (25:58)
Yeah. And so,
Zach Richards (26:00)
so you really need people that that are experts in like how buildings are actually built to know all this stuff, not just Yeah. Okay.
Jeff Hiatt (26:09)
Right. And and so you can't just have some photographer show up and just start snapping pictures because the IRS has got to be qualified professionals. And that's the people that we have on staff that people have been doing this for years. Um, they've gone to courses on it and they know what to look for and what not to look for. Once you get inside of the building, the things you I I mentioned, you know, walls, windows, doors, roof, HVAC, electrical for basic lighting, and then plumbing. And you go, okay, well, that's all structural. That's all going to be the long life. But it's not because for instance the HVAC may have a component of the overall system that isn't 39year. For instance, if it was a grocery store or a convenience store, there's going to be part of that HVAC system that is going to cool those freezers, not just for the comfort of the guests or the customers, but you would have on another, you know, uh in an office building, you would have probably some HVAC that would attribute uh or would cool the server room or maybe that HVAC system is keeping the humidity at a certain level. If you're growing, you know, if Mike likes to grow indoor strawberries and there's a booming business for people buying indoor grown strawberries, maybe Mike has to control humidity there. Um, or
Mike Seidl (27:40)
I'm a raspberry guy, but that's okay.
Jeff Hiatt (27:42)
Strawberries indoors nowadays. Yeah. Come up with something.
Zach Richards (27:49)
Go ahead, man.
Jeff Hiatt (27:49)
So, um you so you got that. Um if you own a restaurant, you're going to have basic HVAC to keep people the c the the guests comfortable.
Zach Richards (28:03)
Y
Jeff Hiatt (28:04)
but then you're going to have even more capacity in the kitchen because you've got those big flames going all the time and the heat of the ovens and all and so that's extra. or if you're a bakery, you need to control humidity there, too, because it will either allow the bread to rise or not. I don't know, but I know that's a thing.
Zach Richards (28:28)
So, it's like the the more complex and specialized the property is, the the more important it is to really have somebody that knows what they're doing do one of these studies,
Jeff Hiatt (28:39)
right? Because here's what's some people go, "Well, I'll just wing it," you know, or there's a lot of talk, shockingly right now on the internet about AI and virtual site visits and remote costs and um non-physical site visits. Some folks in some of my competitors out there refer to stuff as non-physical site visits because they know the IRS disallows remote or virtual site visits. So, they change the name in their engagement letters to non-physical site visits, which means they tell people, "Oh, here's what you're going to do. You're going to do a FaceTime or a Zoom with us and we're going to have you walk around the property and you're going to take pictures and video of what it is we're seeing and we'll tell you what to do." Well, the way that the IRS looks at that from everything we hear and we hear a lot from them through associations we're a part of that they don't allow virtual site visits because they can't confirm that this virtual site visit was done at 123 Main Street or was it done at 456 Main Street or was it done in an AI studio? And since they can't tell, they don't allow them. And so people that are using the remote cost seg groups or whatever they are will in a few years it won't be they hit send on their tax return and immediately they get a paying back that says, "Oh, you're getting audited." It's going to be at least a year, if not two or three. And so then bam, they're getting audited. They're going to lose their deductions. They're then going to have to pay the tax they didn't pay already plus penalties plus interest. And if they've got investors, it's even worse because now that that Ripple is going out to their entire investor base.
Mike Seidl (30:39)
Yeah. So, you can't you can't rent a warehouse for an hour to use it for your visual your virtual uh single family home cost sex study,
Jeff Hiatt (30:50)
you know. Well, I I've seen Sasquatch running around, you know, doing stuff, fun stuff. If they can make Sasquatch do something Yeah. You know, they can make site visits look good, you know, and
Zach Richards (31:04)
until it comes back to bite you.
Jeff Hiatt (31:06)
Until Yeah. Exactly. And that's the problem. and and if it's a small like if it's a $100,000 property, maybe
Zach Richards (31:14)
maybe it's okay.
Jeff Hiatt (31:16)
I mean, not that it's gonna stand up, but maybe somebody's willing to roll the dice. But when you start to get to real bigger numbers,
Zach Richards (31:23)
Yeah.
Jeff Hiatt (31:23)
and the the amount you can lose, that's the problem.
Mike Seidl (31:27)
That's Yeah. I for one don't want to roll the dice with the IRS. They do. They scare the heck out of me. So, I don't Everything I'm supposed to do, if my accountant says pay the tax, I pay it. I'm not going to argue with the IRS. No.
Jeff Hiatt (31:39)
Yeah. Good point. Good point. Um, you know, and so that's what our folks do is break everything apart.
Mike Seidl (31:49)
Gotcha. Okay. Got it. You have a very uh unique niche within uh accounting. And I know that for me, like when I hire an attorney, I look for an attorney who has a very specific skill set for what it is that I'm trying to achieve because I've learned that a general practitioner legally speaking knows about, you know, a mile wide but an inch deep when it comes to information. This is a very niche where you need to be a mile deep as well. So my question is when you have this uh report available for your clients that have just had the cost seg done are do you work with them and their CPA so their CPA can understand what it is that you did is that part of the service that you guys offer is it seems to me it would be necessary.
Jeff Hiatt (32:46)
Um we do that as part of our service. We don't charge extra for it. There are many people out there in the business that say, "Oh, if you need extra services beyond the cost seg, it's three to 600 bucks an hour." We don't play that game. Ours is all included. And what I'm saying there is that because my partners have been doing um that are a couple of them are CPAs, we know how to help the CPA find the right spot. And it's it's amazing because the the folks that are on our team will be talking to me and they'll be like, "Well, what software does he use?" And I'm like, "I don't know what software the guy uses." And they're like, "Well, find out if it's CCH or find out if it's this one or that one." And then I'm like, I call them back and then I just put them together. And then they go, "Oh, okay. Well, on that software, you're going to go to line 87 and press this button and bam, you'll be entering the right fields. So,
Mike Seidl (33:47)
okay,
Jeff Hiatt (33:48)
that's what we do.
Zach Richards (33:49)
So, what are some of the limitations or circumstances that can change the outcome of a depreciated uh related strategy from one taxpayer to the next?
Jeff Hiatt (34:03)
So, there there can be a couple of things there. Um, one being we got to make sure we get the right information in to begin with. So if if it's a condo, we need to know that because a condo is good in that you don't have to subtract out land. So if a building is a condo, the buyer of the condo unit is not the owner of the land. Typically, it's a condo association. And so you don't have to subtract out the land. That's a good thing. But we got to know that. And if we have been told it's a condo and it's not a condo, then that's going to change the numbers. Some other things that will impact are, as I kind of mentioned a little bit earlier, is if the person is losing money, if they're just not selling, as the saying goes, if they're not selling buggy whips like they used to sell buggy whips, they're probably not going to need this. If they're a fix and flip, probably not going to work. if they are only going to hold the property for a year or two and and I say and with capital letters there and not do a 1031 then it probably doesn't make sense. But for most people that are interested in reducing their tax bite that are interested in using that money constructively versus sending it to DC. Um, this can make all the sense in the world just if if they can deploy the money and not waste it on silliness.
Mike Seidl (35:40)
Yeah. Gotcha. That makes sense.
Jeff Hiatt (35:42)
Get that taxfree loan for a period of time,
Mike Seidl (35:44)
right? And do something with it. Gotcha. You've just given a lot of information and I must have been a member of the chess club and didn't know it because I was real focused. I got everything that you said. This was fantastic. Oh, no. I could talk to you for a long time about this. We could geek out for this. I was an economics major, so I like numbers. I like the logic and the step-by-step process. So, Oh, no. I like this. I made it I may need a cigarette when we're done. This is so satisfying. But
Zach Richards (36:14)
now you now you just went weird. I I
Mike Seidl (36:20)
So now my question is what do you give uh trainings on this for real estate investors? Are there you know what is a way that people can learn about this and about the depreciation doctor.
Jeff Hiatt (36:20)
So what we would do is um and we'll we'll provide it in the cliff notes or whatever at the end of it um we can give a a link that will take you so that your listeners could request a quote complimentary since it's part of your save to zero group. So they'll get a complimentary estimate of tax benefit and fixed fee quote, which is what you have to have, so they can understand what the numbers look like for them. We'll have a one-on-one conversation with them with either me or one of my team members, and we'll have a nice conversation and say, you know, Mike, for this, you know, you spent 200 grand on that property. It's probably not going to make sense. But we'll have a conversation with you. We won't just say, oh, too small. Throw it back. um we'll have a conversation. Now, if you said, "Hey, it's 2 million." Then we're going to say, "Hey, Mike, this really looks good. Take a look at this X, Y, or Z." So, we'll help people understand how the whole process works.
Zach Richards (37:40)
Gotcha. Got it.
Mike Seidl (37:41)
Okay. I appreciate that, Jeeoff. I really do.
Zach Richards (37:44)
Yeah. So, yeah, we've got a few minutes left. We know you're on the board of a pretty cool nonprofit here in New Hampshire, and I don't want to spoil it. Why don't you tell everybody more about it, what your role is, and give people some information?
Jeff Hiatt (38:00)
Sounds great. Thank you for that opportunity. You know, I love to talk about Swim with a Mission um and what we do. So, we raise money for veterans and their families. Uh since we started the uh group back in 2017, uh we've raised about at this point $18 million. Um we it's an amazing group, an amazing set of events that we set up. Usually most of them occur within about 36 hours. They typically start on a Friday uh this the week after July 4th. And um we do a big paintball event where there's education from Navy Seals that talk about team building and mental toughness. Then you're led for the rest of the day after two hours of that conversation. You're led for the rest of the day on a paintball team being led by a Navy Seal playing paintball against other teams that are there. This year we had
Mike Seidl (38:56)
getting shot with a paintball by a Navy Seal and they call it education. Oh yeah, it was educational.
Jeff Hiatt (39:03)
That that is sometimes uh so I try to make it very clear that you're not playing paintball directly against the Navy Seals. they're leading you because that was the initial response I got a lot. But um ultimately um I never served myself and I felt right after 9/11 happened that that was a regret and so I couldn't serve then. I was just aged out of it and the possibility and then I had little kids and so my um way of giving back was to help raise money for veterans and their families. And so, um, I did a couple of other groups. We've got this great group going. Um, so we have a lot of fun doing it. I know Zach and Mike have participated now a couple of years and it's been fun and you learn a lot and you just get a different perspective. Um, and so it it just becomes a great time.
Zach Richards (40:00)
Okay, Jeff, I'm sorry. I have to correct you. It is not fun. It is a freaking blast.
Jeff Hiatt (40:06)
It is a blast. you are going to go total blast and these guys and I'm telling you from experience and I make nothing whether you guys go or not. You got to check this out that you go with these Navy Seals that know what they're doing. They're telling you go down here, do this. This is what I want you to do and they're in control of the whole thing and you feel like you're on a mission, but in reality you're just playing paintball and you're not even touching the surface. And these are great people that are in there. It is a lot of fun. What I can tell you is that you do need to wear some safety gear because when you get hit, it stings.
Mike Seidl (40:42)
But it is a blast. And when you get hit, you don't you don't notice it till afterwards and and you see some some markers from it. But it is an absolute blast. It is a fun time. And then they have the banquet uh on one of the nights and the guys come in. It is an absolute blast and worth worth traveling to.
Jeff Hiatt (41:01)
And and great relationships between all the paintball matches. You're there standing around at your tables chatting with the Navy Seals, the other people in your group. It's It's cool.
Mike Seidl (41:10)
Yeah. It It's just It's just a great time.
Jeff Hiatt (41:13)
It is. Yeah.
Zach Richards (41:14)
And you've got some of the SEALs out there that don't wear shirt, you know? They'll just play.
Jeff Hiatt (41:20)
Yeah.
Mike Seidl (41:21)
That's not my thing. But
Zach Richards (41:23)
No, no, no. I was fully geared up and I still got shot and cried like a girl. Yeah. There's no way.
Jeff Hiatt (41:28)
Yep.
Mike Seidl (41:32)
Oh, no. It's a blast. Yes, it is.
Zach Richards (41:34)
It's so much fun. So, like you said, a blast. It's
Mike Seidl (41:37)
Oh, it is.
Jeff Hiatt (41:38)
It's I had one big shot real estate guy from downtown Boston join the first year we did it and he was hesitant at first. He was like, "I don't know. Is this going to be worth my time? It's probably going to be a waste of time." At the end of the day, he came up to me and he said, "Jeff, that was lifechanging." And he's come back every year since. and his partners in his business have said he came back changed because he was particularly I'll say um probably abrupt and and and aggressive and he came to realize after talking to these guys the SEALs and hearing their stories of what they have gone through and what they had to go through that you know losing limbs in battle having to go through Buds training and all of that. These guys when they have a bad day, it's really a bad day.
Mike Seidl (42:37)
It's really bad day.
Jeff Hiatt (42:38)
It's really bad. But for you and I, for you and Mike and and Zach, you know, all of us, if we lose a contract or lose a client,
Zach Richards (42:46)
Yeah. It's not a great day.
Jeff Hiatt (42:48)
It's We didn't lose a leg.
Mike Seidl (42:50)
It helps put it in perspective for sure.
Zach Richards (42:53)
Hell yeah.
Jeff Hiatt (42:53)
Puts it in perspective. Right. And I know you're running on time here, so I don't want to keep going. So,
Mike Seidl (42:59)
Oh, no. Jeff, this was a blast. Thank you very much for having for having, you know, taking time out of your schedule and being on the podcast with us. This is great. I know that you've just given me a significant tool for my tool belt. Hopefully listeners, if you want to get a hold of Jeff, he's given you that option. It'll be a link in the uh in the notes. You can get on there. No con no cost at all. uh we make nothing off of it. So make the call. It's totally up to you. Uh we just want to have good guests on that we've prevetted. We've known Jeff for a couple of years and we think it'd be great for you to give him a call if this is something that you're looking at. So Jeff, thank you very much for your time. This was fun.
Jeff Hiatt (43:38)
Thank you, Mike and Zach. I'm glad we connected here. Thank you for putting this together.
Mike Seidl (43:44)
Absolutely. Excellent.