Significant Net "Losses" on Taxes despite Positive Cash Flow

[Andrey Y.]

I was just doing taxes for 2018 and have noted something peculiar, most of my properties I self-manage. So I do pay monthly PITI and HOA fees. Then there are repairs, occasional utilities, and of course depreciation deduction.

Somehow, almost always I am anywhere from near break-even to a -$3500 loss. So I end up getting money back from the IRS. I am doing everything diligently and by the book. Even though I get a solid 4 or 5 figures in net positive income that flows through my real estate bank account, I am not paying any taxes !! I am actually getting money back from the IRS despite setting "2" for the how many points do you want to claim as a dependent.

I guess I should be really happy? I haven't even inputted the K-1 apartment syndications, which most if not all had passive losses, but I got positive income into my bank account !!! How is this possible?

It seems crazy for any physician to continue working and paying over $100,000 per year in taxes, when they could just be doing this! My mind is pretty blown.

[Jonathan R.]

When you’re in front of the banker, you show all the money you are making. When you’re in front of the irs, you show all the money you are not making. That’s real estate. :)