All Forum Posts by: Scott Jensen

@Julee K Taylor  That sounds awesome. I'd love to see some before and after pictures!

@Nikunj Merchant  Good discussion here. I wanted to chime in that I know @Daniel Johnson and can vouch for him as an advisor and real estate investor. He does good work and you would definitely be in good hands with him.  Best of luck with the search.

The XYPN find an advisor site allows you to search by keyword. Type in real estate and there are now several of us that specialize in working with real estate investors.

@Jim Pfeifer Has good points here. Note, however, that you can only use losses from syndications is you qualify as a real estate professional for tax purposes, and meet the material participation standards for your own rental real estate portfolio and make the grouping election.  So this works in the right circumstances but have a solid plan and talk it through with someone that specializes in real estate taxes. As Jim also mentioned, bonus depreciation is scheduled to phase out...so this strategy is going to lose much of its value in the coming years.

Here's a few other ideas:

Installment Sale - spreads capital gains out over a number of years, which may be helpful. Note that depreciation recapture is still due in the year of sale.

IRA/401(k)/HSA - contributions can reduce tax from the a real estate sale.

Cost Segregation - You can buy a new property, do a cost segregation study to generate a bunch of depreciation and use bonus depreciation in year one. These losses from the bonus depreciation in the new property can be used to offset gains in the old property.

Carryforward Losses - If you have suspended carryforward losses they will be released when you sell and that can offset some of the gains/taxes from the sale.

10131 Exchange - You can also list a DST as a backup if you cannot find a property you like for 1031 replacement property. Then, if your time period is about to expire you can decide whether you want to just let the 1031 lapse. As @Dave Foster mentioned, there's no penalty for doing this. Sometimes you can even use a failed 1031 to your benefit by deferring the capital gains to the next year.

Lower Capital Gains Brackets - If you have flexibility with your income such that you can minimize other income in the year of sale, you may be able to take advantage of 0% taxation in the Standard Deduction, 12% Ordinary Income Rates (which is pretty low), and 0% long term capital gains rates. It really depends on your other income and if you have much flexibility. @Joe Mayol

Really good conversation here. I wanted to add that the huge depreciation benefit in year 1 is a result of the Tax Cuts and Jobs Act TCJA. The TCJA allows us to take the assets from the Cost Seg study (5, 7 and 15 year assets) and take all of the depreciation in year one as bonus depreciation.  The strategy that is being described in this thread works wonderfully under the current tax law.

However, 100% bonus depreciation of these assets is scheduled to be phased out after this year. So, unless congress changes the tax law to make this permanent, this strategy will not be as effective in the future.  Keep this in mind when you're doing your long term tax planning.  Here's an article that describes the phase out. Bonus Depreciation: 5 Key Points

P.S. I have seen year 1 depreciation pretty close to 100% of the investment. It is generally due to a property being very highly leveraged.

Those are pretty high fees.

1. Employee Fiduciary is well known amongst advisors as a low cost 401(k) that is well run and has good investment options. I may be using them in the near future to open a 401(k) for my friend's company.

2. It really depends on your specific situation. If you are going to be leaving the company within the next 1-5 years and 401(k) investing is compelling in your situation, you may want to invest in the plan with the intention of rolling the accounts to an IRA as soon as you leave the employer. If you plan on being with that company for a long time I probably agree with your assessment.

I would definitely go if I wasn't out of town!

I invest in Minnesota and @Tim Swierczek is definitely my preferred lender. Interest rates are important, and Tim helps with that.  More than that though, Tim is super knowledgeable about real estate in general. To me, his advice is worth more than the rates he can get. 

@Matthew Curley You cannot exchange stocks for real estate property without paying the tax. QOZs and margin loans/collateralized lending have been mentioned and those would be a good spot to start. The other thing to consider is just that capital gains are really low right now so it may not be a bad strategy to sell the stocks, pay the tax, and reinvest it in real estate at the new basis.

@Account Closed I'd fix the car and move on.  Its almost always better financially to fix it up and limp it along.

@Heath Foster Another vote for @John Woodrich. He knows more about real estate in general than 90% of investors and more about real estate taxation than anyone I know.