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Uncover the intricacies of tax advantages within the real estate sector, including deductions, credits, and exemptions. Gain a comprehensive understanding of how to maximize your financial returns while navigating the complex landscape of real estate taxation. Elevate your financial literacy and make informed decisions with this essential course on real estate tax benefits.

 Welcome to the next lesson.
Tax benefits.

The tax benefits from real estate investing may be one of the most overlooked benefits that the asset class offers. And yet it could be one of the most impactful for so many of us. We’re going to get into the details in a later lesson, but I wanted to introduce a few terms to you now so you can keep a lookout for them both in everyday life and as you continue your journey through the academy.

One of the most powerful tax benefits we get as real estate investors is called depreciation. Again, not going to get in the details of how and why just yet, but I want these words to be recognizable to you in later lessons. An additional tax benefit is all of the write offs and deductions we get to take on our taxes as real estate investors.

Now, I want to be crystal clear here. When I say real estate investor, I’m talking about buying and holding real estate for at least one year. If you’re fixing and flipping or wholesaling, all of which we’re going to be defining in a future lesson, these major tax benefits may not apply to you, but it’s essential that you speak with your tax professional to be entirely certain.

Lastly, one of the most common, and I’d argue powerful tax benefits we get as real estate investors is the 10 31 Likekind Exchange. Again, we’ll cover this in depth in future lessons, but important to know that it’s basically a part of the tax code that allows real estate investors to sell a property, purchase a new one for the same price or more, and defer all of the capital gain taxes.

Let that sink in for just a minute. You defer any capital gain taxes that you pay on the sale of the property that can be life changing and generational wealth creating. Now, there are many rules and stipulations that need to be adhered to, but they’re straightforward and easy to follow once you understand them, which is why nearly all of the major investors I know have taken advantage of this tax benefit at least once, if not multiple times throughout their investing career.

There’s a great saying in the real estate investing industry, and it’s swap till you drop, meaning continue to do 1031 exchange after 1031 exchange until you pass away. Reason being is one of the best tax benefits, which is kind of unbelievable, at least at the time of this recording is after you pass away, something called the step up in basis.

Now, again, we’re going to get into what that is in a future lesson, where we’re going to take a deep dive into all of the tax. Benefits and how to use them effectively. But for now, these are just a few of the things I wanted to mention and put on everybody’s radar.

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