Taxes for Real Estate Investors with Chris Picciurro

As accountants, we get to specialize in a ton of different areas, from industry niches to specific client types and needs. As the host of this show, one of the most thrilling parts is bringing in experts who specialize in various fields. I'm excited to chat with Chris Picciurro today!

Chris is a renowned tax planning and strategy expert for US-based real estate investors. With so many folks investing in this asset class, his knowledge of tax strategies for real estate investors is an absolute game-changer. His impressive credentials include a CPA, MBA, PFS, and ARA, and he's even taught as an Adjunct Professor at both Baker College and Davenport University. Chris is a passionate innovator who's dedicated to helping taxpayers reduce their taxes over their lifetime. And, just like us, he believes that "keeping what you earn" is absolutely essential for business owners and real estate investors. Get ready to learn a ton from Chris!

"No matter what, investing in real estate can have a lot of tax advantages. Legally and ethically reduce the tax you pay in your lifetime, but is income shifting to related entities."

In this episode, you will learn the following:

1. The Benefits of Real Estate Investing: Learn how to take advantage of the short term rental loophole and cost segregation strategy to reduce your tax burden.
2. Exploring the Relationship Between Cash Flow and Tax Flow: Discover how you can have a positive cash flow while producing a tax loss.
3. Taking Advantage of Step Up in Basis: Find out how to maximize the tax benefits of inherited real estate.

What you'll hear in this episode:

• What are the key tax advantages to real estate investing?
• Are there any differences between short-term and long-term rental and how that can affect tax liability?
• The Get Out of Jail Free Strategy.

Here are some brief snippets from this episode:

[00:06:03]
The cool thing about real estate is that you get to pay tax on your net income. Beyond that, there are so many tax benefits as well. One of our second law of teaching tax flow is understanding cash flow versus tax flow.

[00:07:43]
Almost every business owner can use real estate in a tax advantaged way. Real estate is a passive activity according to the IRS, and passive activity rules do play a role. Capital loss carry forward can be utilized in the future.

[00:12:14]
There are special rules with short term rentals that allow you to not treat that activity as a passive activity. To qualify for that short term rental loophole, a lot of times you want to blend that with the cost segregation strategy.

[00:16:38]
The get out of jail free strategy is you can go do a cost segregation study, still count it for your 2022 return, even if you bought the property in 2020. Put all your money in real estate and then give me that as an inheritance.

[00:19:48]
The step up and basis from a deceased spouse at least 50%. And in some community property states, it could be 100%. A lot of accountants let their workflow control them and they don't control it. Have a second look at your property and see if there's any hidden deductions.

[00:21:34]
If Disney was real estate, you'd get to deduct almost $4,000 a year as a deduction just for holding the stock that's depreciation. That's why real estate is so powerful. And that results in a lower tax bill in the process.

[00:22:17]
If you're selling your property and you're making money on that sale, what does that mean for taxes? Talk to us about what happens when you sell a piece of property and how you can navigate taxes.

[00:23:06]
One of the misconceptions is that whatever cash you receive at closing of a real estate transaction is your taxable income. Another option would be to invest the capital gains in a Qualified Opportunity Zone fund. Many times the tax burden is a lot less than you might think.

[00:28:57]
Section 121 of the tax code allows you to exclude a significant amount of money from your taxable income. The section 121 exclusion is a great way to build wealth if you are open to moving around a little bit. There's so many different dimensions to how you can use real estate to your advantage.

Related episodes:

Does an S Corp Make Sense for Me?

Tax Tips for Short Term Rental Owners with Ryan Bakke

How to Take the Home Office Deduction

Resources:

Visit Chris's website to receive KWYE exclusive offer: www.teachingtaxflow.com/keep

Find Chris on Facebook: https://www.facebook.com/YourRealEstateCPA/

Connect with him on LinkedIn: http://www.linkedin.com/in/picciurro

Follow him on IG: https://www.instagram.com/teachingtaxflow/

Find everything you need at www.keepwhatyouearn.com! https://www.keepwhatyouearn.com/

Questions about this episode? Text me!: https://my.community.com/shannonweinsteincpa

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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.