What are the top 4 advanced tax strategies for real estate investors? In this video, I will discuss these four advanced tax strategies for real estate investors and how they can utilize them. These strategies can help you reduce your tax liability, increase your net worth, and improve your overall bottom line.
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If you’re an experienced real estate investor, you know efficient tax planning is essential for success.
These tax strategies can help you reach your goals and achieve new heights. Watch this video to learn about these strategies and how they can help you reach your real estate goals!
Real estate investors have many opportunities for growth and success, and an intelligent tax strategy can help you take advantage of those opportunities.
Whether you’re a first-time or experienced real estate investor, these strategies can help you save on your taxes. I’ll discuss each strategy’s benefits and provide tips on how to use them to your advantage. After watching this video, you’ll be well on your way to achieving your real estate goals!
Watch the video until the end to fully understand the four strategies on my list and learn how you can use them to your advantage.
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Show Notes:
0:00 Intro
0:24 Find A Professional
2:38 1031 Exchange
7:38 Self-Directed IRA/ 401K
13:04 Cost Segregation
20:45 Entity Structuring
25:55 Outro
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Toby Mathis, Esq. is the best-selling author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Toby is a tax attorney and founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. Learn more at
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Top Four Advanced Tax Strategies For Real Estate Investors
Real estate is a popular investment option known for its ability to generate income and build wealth. However, like any other investment, it comes with its own share of tax obligations. Fortunately, there are several advanced tax strategies available to real estate investors that can help maximize profits and minimize tax liabilities. In this article, we will discuss the top four advanced tax strategies for real estate investors.
1. 1031 Exchange:
A 1031 exchange, also known as a like-kind exchange, allows investors to defer taxes on the sale of a property by reinvesting the proceeds in a similar property. By doing so, investors can postpone capital gains taxes and potentially increase their purchasing power. This strategy is particularly useful for investors looking to upgrade or diversify their real estate portfolio while deferring substantial tax liabilities.
2. Opportunity Zones:
Opportunity Zones were established under the Tax Cuts and Jobs Act to encourage investment in designated economically distressed areas. By investing capital gains into a qualified Opportunity Zone Fund within 180 days of realizing the gain, investors can enjoy significant tax benefits. These benefits include deferred taxes on the reinvested capital gains and potential elimination of capital gains taxes on the profits generated from the Opportunity Zone investment.
3. Cost Segregation:
Cost segregation is a tax strategy that allows real estate investors to accelerate depreciation deductions on their properties. Under normal circumstances, residential rental properties are depreciated over 27.5 years, while commercial properties are depreciated over 39 years. However, through a cost segregation study, investors can identify and allocate certain components of a property, such as fixtures and equipment, to shorter depreciation periods. This reduces taxable income and increases cash flow by accelerating depreciation deductions.
4. Real Estate Professional Status:
Real estate investors who qualify as real estate professionals can deduct real estate losses against other income, such as salary or business income, without limitations. To qualify, an individual must spend more than 750 hours per year in real estate activities and must materially participate in their investments. By meeting these criteria, investors can take advantage of significant tax benefits and potentially offset income from other sources.
These advanced tax strategies can greatly benefit real estate investors by maximizing their after-tax returns and freeing up cash for further investments. However, it is essential to consult with a tax professional or investment advisor to fully understand and implement these strategies according to legal and regulatory requirements.
In conclusion, real estate investors have access to several advanced tax strategies to reduce their tax liabilities and optimize their financial outcomes. These strategies include the 1031 exchange, Opportunity Zones, cost segregation, and real estate professional status. By leveraging these tactics effectively, investors can navigate the complex tax landscape while maximizing profits and building a successful real estate portfolio.
Don't pay the IRS a penny as we are only allowed to use FRNs (they are not LAWFUL money) and it is illegal to use debt (FRNs) to pay for a debt. That is the most intelligent, fair, moral and equitable strategy.
My wife is the beneficiary of her parents trust. Both her parents recently died. There is land in the trust. The appraised value of the land at the last persons death was $x. If the land is eventually sold for a greater value than the appraised value, can my wife do a 1031 exchange to avoid paying tax?
If you invest in real estate in a self directed IRA or a 401 K, what happens when you hit the age when RMDs kick in? Do you have to see your properties to pull the money out of the IRA/401 K and pay tax on that distribution?
So here is a big question for you: does the property that you buy for the 1031 exchange have to be on US soil? (Can it be used to buy property in a foreign country?)
Do these rules only count in an llc or is the llc assumed in your lessons always
Can you make a video on if you win the lotto and the best ways to navigate that route?
Coach Toby let's go!! I ❤ these tax deduction classes
Can you please recommend books on these topics? Your videos are awesome.
I have been told numerous things about 1031 exchanges. If I rehabbed a home and then sell it, can I do a 1031 exchange. Then I was told that only if the project takes at least 1 year to complete the project and sell it, so holding time is over a year. Then I was told 1031 exchanges don’t apply to rehabbing and selling homes at all. What’s the reality? Can I do 1031 exchanges when flipping homes? Are profits from flipping homes categorized as capital gains (long or short capital gains)?
But don't you lose the tax benefits (RE expense related deductions & depreciations) if you invest in real estate via traditional SDIRA since you still required to pay tax when you start taking your distributions after age 72 1/2?