Investor · Dallas, TX · Member since 2019 · 15 posts · 14 votes
I know this really sounds like a dumb question. My husband and I acquired our first rental property last year and we got very few write off's and our tax bill in general was very high. I tried to do some research.
I watched Mark Kohler's video on tax strategies and LLC's and he talks about 3 types of investors: Passive, Active, and Professional. I believe now that I fell into the passive category, and if I were to move into the active category then it would have more financial benefits and tax shelters. But, how do you define what "active" is? How does the government define "active"? How can I move into the Active category and start to reap the benefits of better write off's? (side note: We are selling our home in CA and moving to TX next month, DFW area-so not sure if location helps. Thinking about acquiring more properties and putting them into a series LLC which is allowed in TX but not in CA).
Any advice, podcasts, book recommendations also welcome, thanks!
Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
5y
For tax purposes, if you a real estate professional, you get to deduct more on your taxes per year instead of waiting until you sell the property. You need to work 750 hours per year (double-check that number) in real estate. That could be as an agent or managing your portfolio. This also must be your primary source of income.
Try researching real estate professional tax advantages instead of active investor.
Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
5y
For tax purposes, if you a real estate professional, you get to deduct more on your taxes per year instead of waiting until you sell the property. You need to work 750 hours per year (double-check that number) in real estate. That could be as an agent or managing your portfolio. This also must be your primary source of income.
Try researching real estate professional tax advantages instead of active investor.
Investor · Dallas, TX · Member since 2019 · 15 posts · 14 votes
5y
@Dylan Whitcher I am not sure yet, but I think I want a couple in different locations for different reasons. Hoping to join some RE networking groups once I arrive. Super excited to get there and get going!