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reduce your w tude taxes

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with real estate. By.

3:00

Cyrus Van over. Working.

3:03

For a company is the most common

3:05

way people in the United States are

3:07

in their living. As an employee, your

3:09

earnings are reported on I form W

3:11

To and Federal State Medicare and Social

3:14

Security. Taxes are withheld every time you're

3:16

paid. Although. There are

3:18

benefits to being and employees. I'd

3:20

simplified tax preparation. You may pay

3:22

more taxes and self employed individuals

3:25

or business owners because you can't

3:27

claim certain deductions. And as

3:29

a mean, you don't have options. However, You. May

3:32

be able to supplement your income,

3:34

grow your net worth, and reduce

3:36

your tax obligation. By. Investing.

3:39

In real estate. understanding.

3:42

Real estate and tax basics. Let's dive in.

3:45

An. Investment in real estate can be used

3:47

to lower your overall taxes that you

3:50

pay including your w two income. This

3:52

is done by using certain text

3:54

strategies like depreciation ten Thirty One

3:57

exchange, deducting mortgage interest on taking

3:59

advantage of. Your

4:01

ability to use real estate tax

4:03

deductions to offset your w two

4:05

income from investment losses may be

4:08

limited by the passive loss rules.

4:10

However, some. A. Passive

4:12

loss occurs with a rental properties

4:14

when the operating expenses exceed the

4:17

rental income. Yes, one

4:19

of your rental properties suffers flood damage, for

4:21

example. You. Don't have flood insurance. The

4:23

repairs could be more than your rental income

4:25

and a year. Depending. On the

4:27

severity of the damage of course. There.

4:30

Is an exception to the passive laws

4:32

rules for the twenty twenty four tax

4:34

here. If you qualify as a real

4:36

estate professionals. A passive real

4:39

estate investment is one in which

4:41

you don't materially participate like renting

4:43

apartments or single family homes. If

4:46

you're adjusted gross income as a hundred grand

4:48

or less and you incur a loss from

4:50

your rentals in a tax year, You.

4:52

May be able to use that loss

4:55

to offset your non passive income like

4:57

w two income. For. Up to

4:59

twenty five thousand dollars is you

5:01

are real estate professional. So.

5:03

To qualify as a real estate professional in

5:06

the eyes of the I arrests, you must

5:08

meet to criteria. Material.

5:10

Participation: You are actively involved in

5:12

the operation of your real estate

5:14

investments. The Iris provide several

5:16

tests to determine this my the way

5:19

time spent. You must spend more

5:21

than sixty percent of you're working

5:23

time and attacks year materially participating

5:25

in your real estate investments. This.

5:27

Is Cs to make sure your

5:30

real estate activities are your primary

5:32

occupation. If. You believe you

5:34

qualify as a real estate professional? It's.

5:37

Important to keep detailed records of your

5:39

participation in your real estate activities to

5:41

prove it. If. You are Audited.

5:44

You're. Gonna need to prove the hours you work

5:46

and the nature of your involvement. Real.

5:49

Estate Strategies for reducing w

5:51

to taxes. There. Are several

5:53

ways that you may be able to reduce your

5:55

w to taxes with a real estate investment. The.

5:58

Type and whether you have an

6:00

equity or Dad Investments determines the

6:02

strategies your qualify for. Direct.

6:04

Ownership and Rental properties. Owning

6:07

long term rentals let you grow your

6:09

net worth almost on Auto Pilot, really.

6:11

Other than making sure your rentals are

6:13

maintained in a few other things, this

6:16

strategy can be mostly passive. The.

6:18

Most common way investors reduce tell

6:20

you to taxes with a real

6:22

estate investment is by depreciating their

6:24

properties. So. Depreciation is just him.

6:27

An accounting strategy that allows you to

6:29

the duct a portion of the purchase

6:31

price of your property on your taxes

6:33

each year until the full amount has

6:35

been deducted. Remember. That

6:37

the depreciated value of a property is

6:39

not the same as it's market value.

6:42

For. A residential property, The I Rs allows

6:44

you to depreciated over a period of

6:46

twenty seven Point five years, And Twenty

6:49

twenty four. Why That number? Nobody.

6:51

Will never know. For. Commercial

6:54

properties. That appreciation period is of

6:56

course thirty nine years as been

6:58

here. Surgeons.

7:01

Thirty Nine. I. Don't have

7:03

Where did they come up with this? dup. Real.

7:06

Estate Investment Trusts Reads Or let's take

7:08

a look at Real Estate Investment Trusts

7:10

Role reads is just a way to

7:12

invest in real estate without having to

7:15

deal with all the tenants. Maintenance.

7:18

and other time consuming real estate

7:20

issues. Reads: Are companies

7:22

that own and operate income producing properties.

7:24

They invest in a whole bunch of

7:26

different types of properties including residential, commercial,

7:29

industrial, and. Others.

7:32

Are those summaries are privately controlled?

7:34

Many are publicly traded on stock

7:36

exchanges, which makes them a highly

7:38

liquid investments to. Income. From

7:41

a read his received as a. Dividend.

7:44

Although a reed is not directly lower

7:46

your w to taxes the same way

7:48

as rental properties, there are some indirect

7:51

ways that may provide some tax benefits.

7:53

Read. Investors can benefit from tax

7:55

deferred growth on their investments. For

7:57

example, If. They're held in tax. It.

8:00

Interested accounts such as Iras or

8:02

Four O One K Plants qualified

8:04

dividends may also be taxed at

8:06

Capital Gains tax rates and Twenty

8:08

Twenty Four, which are lower than

8:10

the rates for ordinary income. Real.

8:13

Estate crowd funding platforms.

8:16

Are. A In recent years a new

8:18

way to find real estate opportunities has

8:20

made it easier to invest. Of course,

8:22

crowdfunding platforms all over the place operate

8:25

entirely online, and they allow you to

8:27

pool your money with other people for

8:29

certain projects. You. Can browse many

8:31

different opportunities and crunched the numbers to

8:33

see which one appeals to you. The

8:36

best real estate crowdfunding platforms

8:39

offer different types of investments

8:41

that can be single family

8:43

homes, apartments, commercial properties, industrial

8:45

real estate, development projects, all

8:48

that stuff. You. Can

8:50

invest in income producing properties or just

8:52

act as a lender and earn some

8:54

interest. If you are a

8:56

w to earn are investing through a crowdfunding

8:58

platform, The tax implications will depend on whether

9:01

you're a dead. Or. Equity

9:03

investor. If. You're lending

9:05

money. That. Investing to earn

9:07

interest, the interest is taxable as

9:10

ordinary income and Twenty twenty four.

9:12

If. You're an equity investor who earns investment

9:14

in ten. You might be subject to capital

9:16

gains tax if you sell your investment for

9:19

a profit. But. It's probably

9:21

lower than your tax bracket on ordinary

9:23

income. You. May also be able to

9:25

take a depreciation deduction for the portion of the

9:27

property you own. More.

9:30

Advanced real estate Tax

9:32

Strategies. If you're inexperienced

9:35

investor, let's take a look. You

9:37

may be considering a ten thirty

9:39

one exchange or Investing and Opportunity

9:41

zone. Both. Strategies might help

9:43

you save on capital gains taxes

9:45

in the current tax year. Let's.

9:48

Take a quick snapshot of each of these

9:50

things. Ten Thirty One Exchange or at first

9:52

up, at Ten Thirty One exchange is a

9:54

strategy that allows you to differ. Keyword

9:57

there the capital gains tax When

9:59

you. L A property for a profit.

10:02

Named. After section Ten Thirty one of

10:04

the Iris tax code, some people refer

10:06

to it as a like kind exchange

10:08

because you purchase an investment property that

10:11

is similar to the when you just

10:13

sold. You. Can in noom

10:15

essentially swap one property for another. This

10:18

strategy doesn't eliminate the capital gains

10:20

tax, However, It. Just

10:22

postpones it. The. Tax will eventually

10:24

need to be paid. But. The main

10:27

benefit of a ten Thirty One exchanges? that

10:29

it gives you more money to invest in

10:31

a new property. When. Use. Those

10:35

take a look at this opportunity

10:37

zones saying investing and economic development

10:39

or right and opportunities own. Is.

10:42

An area that the government believes

10:44

will benefit from economic development to

10:46

spur job creation. They're usually low

10:48

income communities. it was older houses

10:51

and homes and few businesses. Real

10:53

estate investors can take advantage of

10:55

certain tax benefits by investing in

10:58

qualified Opportunity funds to O S.

11:00

Which. Invest in businesses are real

11:03

estate projects. In. These opportunity

11:05

zones. And. Important benefits of investing

11:07

in a que o s. Involves.

11:10

The deferment of capital gains tax.

11:13

If you sell investment property and reinvest the

11:15

proceeds in a queue, a laugh within a

11:17

hundred and eighty days. You. Can

11:19

differ paying all those taxes. Until

11:22

you sell your investment in the Que O

11:24

S. Or. Doesn't tell. December Thirty

11:26

first, Twenty twenty six. Whichever.

11:29

Comes first, Seeking. Professional.

11:32

Advice: Coming in.

11:35

At nearly seven thousand

11:37

pages. The. Us Tax

11:39

code as complex. As a

11:42

quote, street from Captain Obvious himself.

11:44

It's just a little complex and

11:46

to top it all off, it

11:49

changes every year. Because.

11:51

It's important to make sure your taxes are

11:53

prepared correctly. Be sure to seek the help

11:55

of attacks Pro. Some. Real estate

11:57

tax strategies are complex. And.

12:00

And thirty one exchange so he insists.

12:02

Kind of Probably wanna make sure

12:04

you get everything right. Seeking.

12:06

The advice of a financial advisor is also

12:08

a good idea as you're considering certain real

12:10

estate strategies. A. Financial advisor can

12:13

provide expert guidance and may make recommendations

12:15

to help you reach your investment goes

12:17

faster and even save more money on

12:19

your taxes. Finding someone to help you

12:21

with your investment strategy in taxes. Has

12:24

never been easier. With. The

12:26

bigger pockets tax in financial services

12:29

finder. He can really just quickly

12:31

find an investor friendly professional right

12:33

in your backyard. Let's.

12:35

Take a look at some final thoughts. You're. Investing

12:37

in real estate for w two employees

12:39

offers a ton of benefits that go

12:42

beyond tax savings. You could invest in

12:44

rental properties to supplement your future retirement

12:46

income. If. You've used the monthly

12:48

rental income to make the mortgage payments. The.

12:51

Notes will eventually be paid off. And.

12:53

Your own them. Free. And clear. You.

12:56

Can then enjoy mostly passive income and your

12:58

retirement years and or just sell him off.

13:01

For. A huge lump sum. With.

13:03

Careful planning a real estate investment and

13:05

also be used to lower the taxes

13:07

you pay on your w two income.

13:10

And. Addition to helping you save money. Your.

13:12

Investment will also appreciate over

13:14

time, making it a strong

13:16

hedge against inflation. Before.

13:19

You take a tax deduction or credit though

13:21

be sure it's permitted. in the current tax

13:23

year. the tax code is amended every year

13:25

and something that is a tax break one

13:28

year. Might. Not be the next year. If.

13:30

You're kind of unsure about a particular

13:33

tax strategy. Attacks Pro can ensure that

13:35

your taxes are prepared correctly and it's

13:37

that you can take every legal deduction

13:40

and credit that your do. You.

13:42

Can find all of this helpful information

13:45

and all the tips and tricks we

13:47

have. Also the Bigger Pockets Tax

13:49

and Financial Services finder at Bigger packers.com

13:51

right inside this article. Thanks

13:55

for checking out this episode of Bigger

13:58

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