Real Estate Tips

Real Estate Tips

are in a unique situation to position themselves to build tax-efficient wealth. However, steps should be taken to safeguard assets and minimize tax liability. Here are a few tips:

Liability Protection: Form an LLC to cleanly manage business inflows and outflows while protecting assets. (Sole Proprietorship vs LLC vs S-Corp)

Depreciation: Expense home appliances and infrastructure improvements on an individual basis over their service life instead of the aggregated 27.5 yr resident or 39 yr commercial depreciation

Expenses: Cash out business mileage on a monthly basis by running it through your entity (sample mileage log)

Property Exchanges: Use §1031, like-kind exchanges, on property to minimize recognized gain by deferring realized gains

Retirement: Utilize IRAs and 401ks to defer paying taxes (SEP IRA, Simple IRA, S-401k)

Active Losses: Qualify as a real estate professional to take active losses instead of passive losses:

Spending 750+ hours in real property business

Greater than ½ time spent

IRS Exception (<150k AGI)

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