Table of Contents
Introduction: Cracking the Tax Code 10
From Lazy Assets to Tax-Saving Investments 14
Chapter 1 Tax Reform and the Savvy Real Estate Investor 20
Mortgage Interest 21
Accelerated Depreciation 23
Meals and Entertainment 24
Pass-Through Tax Deduction 25
Different Income, Different Treatment 33
What Does It All Mean? 34
Chapter 2 The Do's and Don'ts of Accelerated Depreciation 35
Common Depreciation Myths Revealed 38
What Is Cost Segregation? 40
Common Questions Regarding Cost Segregation 41
Different Person, Different Results 44
Are You Already Claiming It? 46
What Does It All Mean? 46
Chapter 3 Demystifying the Real Estate Professional Tax Benefits 48
Using Rental Losses to Offset Ordinary Income 51
Who Can Be a Real Estate Professional? 52
Material Participation 54
Benefits Comparison 55
Most Common Tax Mistakes 57
What Does It All Mean? 59
Chapter 4 How to Save on Taxes Even When You're Not a Real Estate Professional 61
Offsetting Taxes from Rental Income 62
Different Years, Different Results 64
Is Real Estate Professional Status Helpful for All Investors? 65
Income and Losses Below Threshold 66
Additional Planning Strategies 67
Common Myths About Real Estate Professional Status 69
What Happens to the Unallowed Losses? 71
What Does It All Mean? 72
Chapter 5 Squeezing the Most Tax Savings from Your Short-Term Rentals 73
Tax-Free Rental Income 75
Rental Business Versus Active Business 77
Rental Arbitrage 83
Operating a Hotel 84
What Does It All Mean? 86
Chapter 6 A Tale of Two Investors: Flip vs. BRRRR 87
From Broke to BRRRR 91
The Taxes Behind BRRRR 93
How Long Must the Property Be Kept as a Rental? 95
Same Numbers, Different Answers 97
What Does It All Mean? 97
Chapter 7 Playing Keep Away from the IRS Using 1031 Exchange 98
What Properties Are Eligible for a 1031 Exchange? 99
What Assets or Properties Are Not Eligible for a 1031 Exchange? 101
What Are the Time Requirements? 101
Time Requirements Can Be Stressful 104
What Are the Monetary Requirements? 106
What Are the Ownership or Title Requirements? 110
Which Taxpayers are Eligible for 1031 Exchange? 112
1031 Exchange Intermediary 112
Who Is It Ideal For? 114
What Does It All Mean? 114
Chapter 8 1031 Exchanges Gone Wrong 116
What Else Can Go Wrong in a 1031 Exchange? 119
When Is a 1031 Exchange Not an Ideal Choice? 123
How to "Drop and Swap" for a 1030 Exchange 126
What Does It All Mean? 128
Chapter 9 Cashing Out of a 1031 Exchange Without Paying Taxes 129
Refinancing the Property to Take Cash Out 130
Primary Home and 1031 Exchange Combination 131
Using Offset Strategies to Take Out Cash 134
What's the End Game? 135
What Does It All Mean? 138
Chapter 10 Supercharging Your Retirement with Real Estate Assets 139
Regular Retirement Account Versus Self-Directed Retirement Account 142
Who Can Have a Self-Directed Account? 143
Which Retirement Accounts Can Be Self-Directed? 144
What Can a Self-Directed Retirement Account Invest In? 144
Disqualified Persons and Prohibited Transactions 146
What Does It All Mean? 149
Chapter 11 Bigger and Better Retirement Accounts 150
Individual Retirement Account (IRA) 151
Roth IRA 152
Solo 401(k) 154
Defined Benefit Plan 159
What Does It All Mean? 160
Chapter 12 Two Retirement Investing Tax Traps and How to Avoid Them 162
What Is UBIT, and How Does it impact Real Estate Investors? 163
What Is UDFI, and How Does It Impact Real Estate Investors? 166
Why Is This Tax Missed by So Many Investors? 170
Are UBIT or UDFI Necessarily Bad? 171
What Does It All Mean? 172
Chapter 13 Use Uncle Sam to Help Raise Money for Your Real Estate Deals 173
Seller-Financing 174
Lease Option 177
The Important Tax Factors 180
Tapping into the Retirement Gold Mine 181
What Does It All Mean? 184
Chapter 14 Taking Advantage of Opportunities in the 0-Zone 185
Who Can Invest in the Opportunity Zone? 189
What Is an Opportunity Zone Property? 190
What is an Opportunity Zone Fund? 192
When Are the Deadlines for Opportunity Zone Investments? 192
The Ugly Side of the Opportunity Zone Program 193
Putting It All Together 193
Opportunity Zone Versus 1031 Exchange 195
Opportunity or Trap 196
What Does It All Mean? 197
Chapter 15 The Perfect Tax Plan 198
Take Action on Taxes 202
Whom Can You Count On? 204
Tax Planning by Design 206
Appendix A 208
Appendix B 210
Appendix C 212
Appendix D 214
Acknowledgements 216
