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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