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Updated almost 4 years ago, 03/17/2021

User Stats

4
Posts
2
Votes
Joseph Calabrese
  • Rental Property Investor
  • Brooklyn, NY
2
Votes |
4
Posts

Can rental property depreciation offset 401k withdrawal income.

Joseph Calabrese
  • Rental Property Investor
  • Brooklyn, NY
Posted

I am 32 and just bought my first rental property with my brother. It’s a duplex he lives on one side we rent out the other. My background is mostly stock investing (professionally and personally) but this first rental property purchase was fun and I have been rabbit holing super hard on all the benefits of real estate ownership and I had a thought that I was wondering if anyone has some insight on. I invested heavily and early in my 401k and manage it all in single stocks and it has done very well and is my biggest asset by some margin. Hopefully this continues through my career. If you end up with a very large pre tax retirement account when you can first withdrawal at 55 and you have a portfolio of rental properties you purchased with after tax money and you make sure to qualify as a real estate professional.... could you then do cost segregation analysis in your portfolio and run up your depreciation as high as possible (maybe buy some more properties and do the same) in order offset all or most of the tax on the 401k withdrawal? Not a pertinent issue obviously given my age but just spitballing here.

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