to 1031 or not? Can bonus depreciation be used to generate similar tax benefits?
I'm working with family that is in the wind-down/retirement phase of their real estate investment careers. They have been actively managing a few small mulitfamily homes for many years and no longer desire to be actively managing. These properties have been owned for many years so approx. 90% of the sales price is capital gains - let's say four properties worth approx $1M each today.
With 1031s - DSTs seems like a possible approach since it's truly passive however returns are low. However given the large proportion of gains I think the tax deferral is quite valuable.
I've also read that bonus depreciation (e.g., via syndication) could achieve significant losses in the year of acquisition. Could those losses offset the gains from the sales of the properties? Certainly won't be completely deferred/offset as with 1031 but maybe higher returns from a syndication make this worth considering? Are we thinking through this correctly?
Lastly, I've also read that bonus depreciation is not recognized in the state where we live (same state as where the properties to be sold are located). Is this relevant or is the relevant factor the location of the syndication properties that would take advantage of the bonus depreciation?
Thank you in advance - so many knowledgeable people here and I've learned so much from the forum!
With 1031s - DSTs seems like a possible approach since it's truly passive however returns are low. However given the large proportion of gains I think the tax deferral is quite valuable.
I've also read that bonus depreciation (e.g., via syndication) could achieve significant losses in the year of acquisition. Could those losses offset the gains from the sales of the properties? Certainly won't be completely deferred/offset as with 1031 but maybe higher returns from a syndication make this worth considering? Are we thinking through this correctly?
Lastly, I've also read that bonus depreciation is not recognized in the state where we live (same state as where the properties to be sold are located). Is this relevant or is the relevant factor the location of the syndication properties that would take advantage of the bonus depreciation?
Thank you in advance - so many knowledgeable people here and I've learned so much from the forum!