Passive Losses and Rental Real Estate | Mark J Kohler | Tax & Legal Tip


hi mark Kohler here with another tax and
legal tip now I have a lot of new clients that come to me and say hey mark
I don’t I don’t track all those right offs with my rental property dining
travel entertainment and cell phones a home office but my accountant before
said I make too much money so I don’t get it right off Oh wrong answer you’ll
get a write-off it’s all about timing let’s talk about passive losses and
rental real estate now let’s go to the board and and keep in mind this is a
huge topic I’ve got several videos in my tax and legal library it’s a chapter in
my book it’s well worth the investment check it out below it’ll save you
thousands of dollars and you may even need to give it to your accountant so
they can get up to speed on it this is a big deal now what we do is we divide
your life into two sides we put short term income over here and this is where
some of you might have your operational business or you might have a w-2 this
could be a Corp it could be an S corp whatever that’s not the issue it’s your
long term side where we really need to do the planning and this is where all of
your rental properties are how many LLC’s which LLC’s do you use which state
all that stuff topics for other videos in my tax and legal library but let’s
talk about the losses that these rental properties generate now why do rental
properties create losses even though they’re going up in value and they’re
creating cash flow they create losses on paper and that’s because of the big B
and I don’t mean Dallas I’m talking about depreciation and writing off
mortgage interest in all those again little expenses travel dining
entertainment Home Office PDS laptops the kids you want to track all of that
because this is a business a rental property is a business and I want you to
extract as many write offs as you can and what happens is those write offs
including depreciation the big one they generate a loss on paper even though
you’re building wealth and you’re getting cash flow
okay now the IRS is going to put you into one of three categories this is
going to be the passive category or active or real estate professional
now each one of them comes with their own bag of tricks now when you’re a
passive investor you can only deduct these passive losses against passive
gains I don’t want any of my clients over here I want them to at least check
the Box active where you can deduct up to 25 grand of losses up to the point
where you make 150 grand AGI and this is where a lot of people say well I’m
making too much money I don’t get the write-off
oh you’ll get them they go into a passive loss carry-forward bucket now if
you’re in the third category the real estate professional you can deduct all
these losses every year no bucket no carry forward they just come over here
and you can ride them off against your w-2 your spouse’s w2 other income if one
of you qualify as the real estate professional I’ve got other videos on
that in my youtube channel and big long awesome videos in my library check them
out but let’s talk about this bucket this bucket of losses and this is where
I want clients to build this up whether they’re an active investor or a passive
investor these losses are going to carry forward for the rest of your life
they go into this bucket and I want us to track all these losses and what’s
cool is when you sell any rental property any day in the future you can
dump this bucket out and against any other gain on any other real estate the
losses are not tracked per property they’re carried forward and one bucket
now if your accountants checking the right box you should be at least active
but you’re gonna carry these losses forward and ride them off as you sell
property in the future this is why rental property is again one of the most
powerful strategies in building wealth is so that we can get appreciation cash
flow and passive losses bottom line hopefully I’ve taught you something
about the power of tax planning and a real estate investing guys there’s so
much to learn in this area please continue to follow me and check out my
information here coming in a moment and continue to live your American dream and
buy rental real estate it’s a huge part of your financial freedom plan thanks so
much for watching it if you found that helpful please look in the description
below I’ve got links to my tax and legal library my QuickBooks training videos
how to start a small business 50 60 70 videos some as long as 30 minutes
explaining more information on tax and legal
strategies that will change your life also if you’d like to subscribe to my
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