Best Tax Strategies for Real Estate Investors

[Julio Gonzalez]

Unfortunately, the tax code can be a burden for those who don’t understand it. But the good news is that if you find a great CPA to work with, they can utilize tax optimization strategies that help save you money. Instead of thinking of tax as something that drains your wallet, I like to think of it as a way to increase your cash flow. When you utilize strategies that reduce your taxes, you’re creating immediate cash flow to put back into your business and grow your wealth.

As a real estate owner myself, here are some tax strategies that I’d recommend discussing with your CPA.

• Energy Tax Credits
• Solar Tax Program
• Historic Tax Credits
• 1031 Exchange Program
• Real Estate Depreciation Investing
• Opportunity Zones
• Engineered Charitable Deferred Trust
• Cost Segregation
• Net Income Loss Acquisition
• Low Income Housing Tax Credit
• Employment Tax Credits

These tax strategies offer so many benefits. With solar panels, you can receive a tax credit AND earn income. You can significantly reduce your taxes with a cost segregation study and bonus depreciation by accelerating your depreciation. You can lower your taxes by accelerating charitable giving. You can receive both tax credits and deduction for inputting green, energy friendly appliances, lighting, etc. to your multi-family and commercial properties. These are just some of the ways to reduce your taxes! If you have any questions, as always feel free to reach out.

What are some of your favorite tax strategies?

[Jack Martin]

@Julio Gonzalez our favorite is cost segregation/bonus depreciation. This gives a host of our investors the opportunity to offset gains from the sale of real estate wherein they were either not able to execute a 1031 successfully, or chose not to.  Also, since the tax benefits carry over, it offers investors passive losses they can use against qualified passive income in subsequent years. 

With that said, the window will begin to close starting next year, so investors seeking this kind of tax strategy should consider taking advantage of it while it is at or near 100%. Feel free to elaborate since you initiated this thread. Always appreciate your perspective. 

All the best, 

Jack