Out of state investing tax benefits.

[Jason Frink]

Hi BP Family,

I live in California and am about to start investing out of state. I have a CPA that I've used for years but when I brought up the investment to him he said my wife and I combined make too much money so there will be no tax benefits i.e. write offs, depreciation. The real estate outfit I met with out of state says that they have California investors, and they tell a different story. Combined my wife and I make around $270,000 which sounds like a lot but in the SF Bay area its barely getting by. Any help would be greatly appreciated! 

[Katie Balatbat]

@Jason Frink

As others have said, perhaps your CPA isn't quite explaining things properly or clearly enough?  Generally, you probably will still qualify for some tax breaks against the rental income itself, but perhaps he/she meant that you may not be able to use any real estate losses to offset your ordinary wages, interest, dividends, etc?  If your CPA isn't comfortable or knowledgeable about real estate investing, it may be time to seek out a new CPA.  

Also, if you haven't completed your estate planning yet, if you own real property, now may be a good time to consider that for your family.  There also may be ways to enjoy some tax benefits in other types of taxes like gift and/or estate taxes, depending on your goals and family situation, if those are topics that you want to discuss with your estate planning & tax attorney as well.

*This post does not create an attorney-client or CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.