Okay, so we, today we're going to jump into how you can actually
use the real estate losses that maybe you've heard about on social media or
wherever you've heard about it, how you can use these real estate losses to
offset some of your other income, say you offset your W-2 wages or offset
any other income that you have. So who I saw on social media,
actually saw it on social media this morning, where it was an advertisement,
it on, it was on Instagram.
And as an advertisement, we'll actually probably share a picture of this too.
And the advertisement says high income W-2, just paid $30,000
in taxes, own a tiny home at this all-inclusive resort that's fully
managed and use it to- offset your W-2 income.
So we love, you've heard about real estate losses in real estate depreciation
and real estate deductions and how great real estate is and how we can
use real estate to offset income. And it is so cool.
And there are- There are certain circumstances where we can do that.
And it's amazing. When it works, it does feel like magic,
like depreciation and bonus depreciation,
all these words and all these tax law changes you've heard.
Like, it can if you- line it up right and you're structured correctly,
it's amazing. And it's- you can save $30,000 in taxes.
But here's- I- I want this specifically.
Today's episode is talking about how to use those real estate losses.
As a passive investor. So we want- we want passive income,
right? We want freedom. We want financial freedom.
We want- we want to make money in our sleep.
We just want to go to sleep and wake up with more money in
our bank account. Like we love passive income.
But 30, 40 years ago,
in 1986, they passed all sorts of tax laws limiting the deductions
that we can take when we're passive investors.
So you think of like a highly paid,
so f- $500,000 a year, w- doctor that earns money,
all of his money on a w two, these laws,
1986, changed it. So that doctor couldn't just go throw $100,000 at a real
estate investment, not even f- look at the investment,
not even lift a finger, and offset his w two wages.
Like, there's laws that limit what you can deduct,
but there are unique circumstances and unique scenarios where you can unlock those
deductions. And you actually, There are scenarios where you could unlock,
like, in this, what this advertisement says,
where you can have a fully managed property,
where you're not even lifting a finger, and you can offset $30,000 of your
taxes. But here are the specific,
very specific scenarios, where you can use that.
I'm going to share three examples, three scenarios,
and there's, there's others,
and I'm not going to go into, like, every possible scenario,
but there's three specific scenarios.
Where you can use these losses as a real estate investor,
as a passive real estate investor, so if you're investing in someone else's fund,
type of passive and real estate investor, where you can use these losses to
offset the real estate income. So,
number one, Is the simplest. The income that comes from that
property, that comes from that property,
or from your other, like, rental properties,
you can always offset its own income.
So, even if. If you're promised a massive deduction,
this is where we see people running issues. So say,
and I think in this ad, it actually says you'll get a, like $1,000
monthly payment. So you get like $1,000 a month of income.
It's like, okay, great. I got $12,000. That property or that
investment can offset the $12,000 of income.
So that's, that's the first way. Real estate can always offset its own income.
Even if you're passive. So the second.
The way to get around this or the second way that your passive,
your, your passive losses can offset your income.
And this is really where it gets juicy and good where,
where you can actually use these losses to offset your W2 income.
So like in this ad, like, uh, these are the scenarios where you can
offset any of your other income. So one is if you have a
short-term rental property that you manage.
This, this is the catch. That second bar,
what I just said, it's a short-term rental property. This advertisement is talking about
short-term rental properties, but that company manages it.
You need to manage it yourself. Can you spend more than a hundred hours
a year on it? And you have to do more work than anyone else?
Like, you have to manage it. And you can offset,
like, and I won't go into the specifics of how we use the depreciation,
but you put in a hundred thousand dollars as a down payment.
You might get about a hundred thousand dollar deduction.
And, offset thirty or forty thousand dollars of taxes.
And that's if you manage a short-term rental property.
There's other episodes on this. That's a short-term rental property loophole.
So, number one, what you can offset the rental property zone income.
That's the easiest way. Number To offset any of your W2 wages.
It's a short-term rental property that you manage.
And then the last one is the example is if you or your spouse.
That's the key. That's the key part. You or your spouse.
Or rental, uhm,
not rental, uh, real estate professionals.
And a real estate professional, there's also a full-up,
so it's just specifically in this. But that's where you spend more than 750
hours a year. Doing real estate related activities.
That's buying, building, constructing,
repairing, doing land surveys,
uh, brokering, or anything related real estate.
If you're s- spending more than 750 hours a year doing that,
and you spend more time doing that than your other job.
So that full-time doctor, it might be hard for them to spend more hours
doing real estate than their doctor work, but maybe f- he or she's married
and their spous spend 750 hours a year and they're not employed.
So all they need to do is spend 750 hours a year as a
real estate professional. So that, those are the two most exciting areas.
Those last two. I mentioned where you can offset your W two wages,
where you can offset any of your other business income or investment income.
Remember, that's the short term rental loophole and if you're a real estate professional,
but watch out for. So.
The passive, like when someone is raising funds,
people that are raising funds, um,
syndicators, even like they could be really good at real estate and it could
be a really good investment like real estate in general,
a good investment. But with. And they start talking about taxes.
That's, there's usually a catch there and a lot of times they don't understand
your specific tax situation. So make sure.
You're meeting with your tax strategist or CPA.
We're working through those, those details and making sure that it applies to you
before you have some expectation that you're going to have a massive tax savings
from your investment. So that's it. That's all I got for today.
Have a good rest of the day.
