All Forum Posts by: Alton Johnson

Thanks @Joseph Palmiero. Just to make sure I'm clear, other than STRs, there's no other real estate investment activities that I can participate in (via LLC, personally, etc.) that can offset my W2? This is my understanding, but just wanting to make sure I'm not missing something. In other words, investing in an LLC that participates in opportunity zones, I still can't use those deductions against my W2.

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Quote from @Jeremy Santy:

I agree with @Chad McMahan, it seems best to leave this to a CPA. I do own in an opportunity zone where we are planning a STR build, however, in discussing with my CPA it seems that we will be able to avoid capital gains tax on the sale after holding it for a certain number of years and the percent tax you pay goes down each year. e.g. 5 years is ~20%. This is a ways out for us though.

In the past, we've done a cost segregation and accelerated depreciation on a STR which lowered our tax burden. Have you looked into this? Definitely talk with your CPA about it. I'm not qualified, just trying to help. :)

Yep for sure. I understand this as well. It seems perfectly possible with STRs but I'm wondering if it's possible with other real estate or if it's just limited to STRs.

I had a discussion with a real estate developer that told me investing in opportunity zones through his LLC would allow me to offset my W2 income taxes as well, but I don't believe this is possible and hoping to get confirmation while waiting on my cpa (they take forever to respond)

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Quote from @Joseph Palmiero:

If you are flipping houses, the IRS considers that you are in the business of buying and selling real estate. In this case you can deduct a loss generated from a flip.

The IRS treats real estate rental activities as passive with the exceptions that you talked about. You are generally not allowed to offset passive losses with your other income such as w-2 and business earnings.

Flipping houses is not considered rental real estate.

LLCs do not change the tax outcome of your business and investment activities.

Thanks so much for this information. What about investing in opportunity zones? I assume I can't offset W2 with those investments either, is that right?

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I've been lurking around for quite some time and finally at a point to where I can make some major moves in real estate. Aside from capital gains that I have to offset this year, I am also now an W2 employee and fall into the 37% tax bracket.

From my conversations with my CPA and much research online, I have learned that I cannot offset my W2 income taxes with real estate unless it's short-term rentals, since I can't qualify as a real estate professional. However, on the flip side, I'm also noticing and reading that I'm able to offset my w2 income taxes from losses suffered by an LLC. I'm a little confused by this because it seems that I can offset w2 income with LLC losses, but not if it's through real estate investments other than STRs?

Anyone able to chime in on here? I've talked with my CPA and also just waiting on a response, but couldn't help myself but to post here and get some feedback as my head is spinning.

I'm essentially looking to make a big investment into qualified opportunity zones or STRs, depending on what helps offset my capital gains + w2 income.

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All Forum Posts by: Alton Johnson

Alton Johnson has started 9 posts and replied 34 times.

Post: Offsetting W2 and capital gains by investing into real estate

Post: Offsetting W2 and capital gains by investing into real estate

Post: Offsetting W2 and capital gains by investing into real estate

Post: Offsetting W2 and capital gains by investing into real estate