If you’re a real estate professional and pay taxes you don’t want to pay, one of two things is wrong:
- You don’t own enough real estate, or
- You aren’t using all of the tax loopholes legally available to you.
First of all, let’s look at why this is so important. If you have real estate passive tax losses, you may have limits on how much of that tax loss is deductible against your other income.
If your adjusted gross income (AGI) is under $100,000, you are limited to $25,000 of real estate losses. If your AGI is over $150,000, you can’t take any of the losses. Between $100K and $150K, the amount of deductibility phases out.
That is, unless you are a real estate professional. As a real estate professional, you can take a full deduction for all real estate losses (as long as you have basis). Tune in tomorrow for some tips on how to qualify as a real estate professional.
But let’s look at the strategy first. You can accelerate depreciation by use of a cost segregation study and create phantom tax losses, perfectly legally! As long as you can take the tax loss as a deduction, and you can as a qualifying real estate professional, you can take a full loss against your other income.
That is, as long as you have enough real estate and the right tax strategy.
For more information on the cost segregation study and how you can do it yourself, please check out the Home Study Course at https://ustaxaid.checkout-secured.com/cart/AddToCartCheckout?shopID=951&prodID=57827&qty=1. You’ll get instructions and a template you can use to set up to maximize your depreciation.