Who likes paying taxes?
Don’t everyone raise your hands at once.
The reality is taxes are a part of living in a society – they help pay for our schools, roads, libraries, parks and much more.
That’s why at Clover we want to help you understand how to keep more of your taxes in your hands. Then you get control over what aspect of the community you invest in, and which ones are using the money the best.
Real estate investing is considered a passive activity by the IRS.
All passive income is grouped together to determine overall income for the year.
That means if you have capital gains from any passive activity, you can use losses from any other passive activity to offset that.
Quick example:
- Sell one property (or other passive investment) held for longer than a year in 2022 with $10k in profit. Typically you’ll pay capital gains tax of 15% on that $10k, leaving you with $8500 in profit to reinvest.
- BUT if you also invest in another property in 2022 that gives you $10k in losses, now you have $0 in income for the year.
- Now you have been able to use the whole $10k into a new investment instead of paying 15% to the IRS.
Neat right?
Ah, good question.
Real estate is considered a depreciating asset – it loses value over time.
So each year you own it, you get a loss on your taxes since the asset isn’t as valuable. Even if it’s in perfect working order and making a ton of money.
You can increase your income and decrease your taxes at the same time!
When you buy real estate, that first year you can *currently* choose to accelerate depreciation. Which means you get up to 100% that depreciation in year 1 of owning the property!!!
Now, this is changing starting 2023. It will decrease by 20% per year until we’re back to the historically normal depreciation schedule.
YES!
Check with your certified public accountant (CPA) and see how much passive investing can benefit your situation. We are not accountants and all information herein is for education only.
You don’t have to buy real estate on your own! All of these benefits are available as a part of a buying group (syndication).
We regularly have deals that can help you reinvest all your money instead of part of it.
That helps you grow your wealth faster so you can choose how best to help your community.
Love the impact and tax benefits but not sure what the next steps are?
No problem!
Send a note or set up a meet – we’d love to help get you closer to your goals.