The Depreciation Dilemma: Advanced Real Estate Tax Strategies | Ep 20

(Watch the YouTube video of this episode here)

In this episode, we delve into the complexities of real estate investment, focusing on taxes, depreciation, and the strategy of 1031 exchanges. James shares a personal experience about considering selling a property and the tax implications involved, explaining the benefits of 1031 exchanges, how depreciation factors into taxes, and strategies to minimize tax liabilities. The discussion includes technical explanations of capital gains tax vs. ordinary income tax rates and how depreciation recapture works.

// Timestamps

00:00 Welcome

01:08 Diving Into Taxes and Real Estate Investments

11:06 Strategic Tax Planning with Real Estate Transactions

// Key Lessons

1. Understand the game behind depreciation: When selling properties, always account for the potential tax implications of depreciation recapture, as it might impact your financial outcomes more significantly than anticipated.
2. Plan for depreciation's payback: The tax breaks from depreciation today lead to recapture at sale, impacting your profits. Factor this into your exit strategy as a financial reconciliation, not a penalty.
3. Prioritize your tax strategy: When selling a property, depreciation recapture taxes are applied first to the portion of your profit equivalent to the depreciation claimed. This is taxed at a higher rate than most long-term capital gains.
4. Choose a CPA who knows real estate: Partner with a CPA who specializes in real estate to navigate complex scenarios like depreciation recapture. Their expertise isn't just a service; it's a strategic asset that can save you substantial money in taxes.

// Let's build your wealth and improve housing, together.

I'm James Furlo. I live in Oregon, where I help people invest in real estate passively. Over the last 14 years, I've purchased over $4 million in real estate, and I’m excited to give you the opportunity to partner with us and experience the joy of building wealth while improving housing.

Access private investment opportunities, exclusive market updates, principles for passively investing in syndications, and behind-the-scenes insights. https://furlo.com/

// Disclaimer

Please note that investing in private placement securities entails a high degree of risk, including illiquidity of the investment and loss of principal. Please refer to the subscription agreement for a discussion of risk factors.

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