Passive Losses and Rental Real Estate - YouTube

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

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