Hey YouTube what's going on it's Richard found of short-term rental university
and Airbnb super host today's video I want to talk about one of the main
reasons that real estate is one of the best investments that I've discovered
and it comes down to one word depreciation so one of the things that
makes real estate such an incredibly attractive investment opportunity is the
tax friendliness of it we're gonna talk about selling real estate in the future
and deferring all the gains in 1031 that's huge but there's also this
concept of depreciation you see the US government and many other foreign
countries really want people to own real property and in order to encourage you
to own real property as an investment and a business you're allowed to legally
depreciate as an expense all of the things that you buy so it could be the
dishwasher and also the property itself you're not able to depreciate the land
but the land tends to be a very small portion of the value of the real estate
that you purchase the vast majority maybe 75 or 80 percent of the purchase
property price is the building itself now that building itself can be
depreciated over I think it's 27 and a half years so every single year whatever
it costs you divided by 27 and a half and you have that expense the reason
that becomes so incredibly valuable in the short term rental business is that
you should be positively cash flowing meaning your short term rental business
should not only be profitable on accounting and on a tax return but it
should also be generating cash and that you can live on or save or reinvest the
best part is unlike other asset classes in real estate you can actually keep the
vast majority of that because depreciation is such a significant
expense so check this out not only can it be profitable and cash flowing but
you also may not pay taxes on it and that's the best of all worlds that
doesn't exist in many other investments so for instance if I own a portfolio of
stocks and that generates income via dividend
I can't defer that dividend I pay a hundred percent taxes on that dividend
now it's at a lower rate so that's helpful but still I'd rather pay zero
time versus a lower rate of taxes real estate
and depreciation allow you to do that likewise if you have a portfolio of
bonds say and that generates income which is why people own bonds typically
you have to pay taxes on that and the thing about investing and compounding
and we filmed the video on that is the bigger your entire egg is or pie and the
more you compound over time that amount becomes hugely important so you want to
defer or eliminate taxes legally as much as possible in perpetuity and real
estate allows you to do that so speak to your CPA speak to your accountant speak
to your bookkeeper figure out what it is that you have as far as depreciation and
again everything you buy whether it's a stereo or Sonos or a dishwasher that I
think gets depreciated on a shorter schedule check that I think it's about
seven years which is the useful life of it and then the property itself is about
twenty seven and a half and there's schedules so every single year you will
have an expense for depreciation it could wipe out almost your entire game
you may even show a loss and end up with cash in your pocket how beautiful is
that so in closing I just want to reiterate
I'm not a CPA I'm not a lawyer check with your own investment professionals
I'm just here to tell you why I find real estate so invaluable and such a
great investment and why I've done so well with it over the years but please
speak to them figure out what you can do but recognize that real estate is one
asset class that allows you to defer taxes minimize taxes and have a bigger
nest egg or pie that compounds over time so research it know the facts get it
done and make sure that you file it properly if you do so I think you'll
grow really quickly just like I have I hope you found this video helpful please
go ahead and leave comments below with what you do or how you do it what your
CPA says again the more that we share the more that we learn the more that we
grow I hope you liked the video if you did thumbs up and if you haven't
subscribed to the YouTube channel now is the time Charles hit him up with the
bail quick