top of page

Reason #7 : Tax savings/benefits

Taxes- we like to pay them right!??

Nooooo? Keep them away from us!

Well how about tax SAVINGS?

I think that sounds more like it!

Did you know that real estate provides you with another huge benefit? TAX SAVINGS!

Yup I said it, but now you want to know how?

Here goes ๐Ÿ‘‡๐Ÿฝ๐Ÿ‘‡๐Ÿฝ๐Ÿ‘‡๐Ÿฝ

I played kick the can as a kid. Ironically enough the goal of the game is to put the players in jail. Well I assume you are like me and want to play kick the can legally.

First up:

1๏ธโƒฃ 1031 ๐„๐ฑ๐œ๐ก๐š๐ง๐ ๐ž- this is when an investor can continue to defer their taxes (legally) by reinvesting their gains into other similar asset classes to defer the potential tax liabilities youโ€™d receive if you were to sell and take the cash. You can kick the can (erโ€™ asset) down by rolling your proceeds into 1031 exchanges, thereby resulting in large tax savings until you well...kick the bucket. ๐Ÿคซ

2๏ธโƒฃ ๐๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ ๐จ๐ฉ๐ž๐ซ๐š๐ญ๐ข๐จ๐ง๐ฌ? Yup gotcha covered!

Business expenses such as mortgage interest, maintenance costs, insurance and property taxes on your properties etc can be deducted which lowers your income and therefore tax liability.

Ahhh and lastly, the good olโ€™ cost seg.

3๏ธโƒฃ A ๐œ๐จ๐ฌ๐ญ ๐ฌ๐ž๐ ๐ซ๐ž๐ ๐š๐ญ๐ข๐จ๐ง at a high level is when you accelerate the depreciation of an asset in year 1, instead of waiting the 27.5-39 years of straight line to do so. (side note: the government has changed the rules around this one so 2022 is the last year to claim 100% depreciation in the first year. It'll start to phase out in 20% increments but fear not! There's still a ton of incentives.)

For each investor on the investment, they also receive their share in tax savings proportionate to their deal ownership.

And bonus depreciation essentially accelerates this process even further sometimes amounting to 75-100% of depreciation expense in year 1.

I hope this made tax savings fun!

Disclaimer: I am not a tax professional, nor lawyerโ€ฆthis is for informational purposes only. Iโ€™d advise on consulting your tax professional or CPA on how this affects your situation.

9 views0 comments

Recent Posts

See All

That is the questionโ€ฆand well it's a pretty good one to have. We are all on unique journeys of our own as it relates to both concepts. So really, it could be a combination of both? Since we are in a n

Itโ€™s 2023, a new year and a fresh start to being realistic with your finances and expectations for your future. But the only way to dive in is to know the steps to get there. Investing for your future

Passive gets a bit of a bad wrap. Youโ€™ve heard it beforeโ€ฆ Nightmare stories of tenants trashing homes, stealing appliances, or oddly enough deciding that Christmas presents are more important than the