Tax Benefits of Commercial Real Estate
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- Опубликовано: 3 июл 2024
- www.commercialpropertyadvisor... Discover how real estate billionaires like Donald Trump earn hundreds of millions while paying very little in income taxes through the tax benefits of commercial real estate. Anyone who owns commercial real estate obtains these wonderful tax benefits. A must watch for anyone considering buying commercial real estate or who is already in the business.
0:00 Commercial Real Estate Tax Advantages
3:13 Tax Benefit Comparison - 3 Tax Payer Situations
8:20 How It Breaks Down in Numbers
13:52 Real World Example
18:32 Pathway to Being a Real Estate Professional
Discover how you too can use these powerful tax benefits for your own commercial real estate. Learn more about our Protege Program here: www.commercialpropertyadvisors.com/protege-program
I've never seen a teacher like him. He is a Gem when it comes to understanding real estate concepts.
I can only say that you are the best real estate teacher I have ever had! You are encouraging me to stay in this field and advance my skills.
The way you make the information so relatable is great. Well done!
Dam....My mouth is to the floor on the 3rd column of the rules to comm real estate game....Wow! I have a totally new outlook on the real estate business.
This was an EXCELLENT presentation, Peter. I will be purchasing my first commercial property within the next 90 days. ALL of your videos, particularly this one, have been instrumental in shaping my mind as a commercial real estate investor.
You have done more for me in a few videos than the 12 years I spent in the public system. I was hungry for this knowledge, thank you 🙏🏼
Mr. Harris, THANK YOU, SIR!!!!!
You are the BEST Commercial Real Estate teacher anywhere in the USA!!! Thank you again.
great video ! really appreciate your version and how you made it so simple for understanding. thanks
Thank you for sharing this knowledge. Much Respect!!!
This was THE BEST teaching on the beni's of the real estate game I've seen. Thanks for being awesome! XoXo Miki
Thanks for sharing Peter!
Wonderful information in your videos. Keep teaching and inspiring others
This is great information thank you!!
Beautiful video, thank you Mr.Peter
great recommendations..so refreshing!!!
Thank you for this Peter! This is huge. I just paid almost 50% of my 2018 income =O
Thanks for sharing 👍
Wow you are the absolute best. I literally believe if you dropped $100 bill you would be wasting your valuable time picking it up. Great job explaining things👌🏼
epic video guys thx!!!!
Great content Peter, enjoyed
Thank you. I purchased your book and received it today 🙏🙏🙏
Peter your the best thank you keep the videos coming
Thank you Peter, You certainly called to be a Teacher /Speaker/Exhorter.
My apologies for not commenting previously. You put such a great work, the least I can do is to encourage you and bless you with my words.
Regards
Gaven Malope
South Africa.
Great video!
exellent info..
I just read about this in my desk book. All the more reason to get a property in May when I graduate from school.
Great information Peter, thanks.
Peter, Thank you SO much for your dedication to educating us. My wife is full time Real Estate Now, and we are shopping for our very first deal. And you are a huge reason why. Thank you so much again!
How's it going
Wow awesome content thank you!
Thank you. 🙏
Thank you for this great video
great video
Excellent information. I’m not sure if the laws are still the same, but the principal is the key!
Thanks Peter for great videos and information.,...its much appreciated. Can you look at the 2018 and 2019 tax reform and give a video on the similarities and differences of this 2016 US tax benefits and requirements...
AMAZING INFO!!!!!!!
Wow this guy is the real deal! He is on top of his game. Thanks for sharing this videos!!!
Can’t wait to make the full transition
Still trying to understand.. Thanks for the info
Understandable!!!
Great video, has anything changed since you've posted this video? If so would you be willing to make an updated video? Thanks again for the education!
Wow. How much I did not know.
Awesome presentation my brother. So proud of you as always!!! What if you are filing "Single" does the same rule apply for the deductions? Is the $150K limit same for single filing, or is it $75K limit for single filing status?
Welcome to the club! 😁
Wow mind blown!
Caveat to this tax write off approach. My wife and I wrote off about a $100k write offs last year and couldn't refi our home because when we went to the banks that loss went against our income even though our income didn't go down. Just a note...
Hilarious to hear you describe the solution as getting married! Lol. Great video, well done!
How would this work for two "single" brothers that are in the real estate business and work full time seperate careers?
How are you able to write off the car? Lease vs Monthly payment vs Own
Great channel with quality content I only have one question it the depriciation your cash flow?
No, it's only an accounting entry.
My wife says Amen on the housewife role being most difficult!
Would owning raw land for future development/inventory, investment qualify for the 3rd bracket?
Will an update be posted due to the new tax news?
I like it.
Hi Peter,Thanks again for the great videos, I bought your cre for dummies, and completed your work course on your website, going to go over it again maybe another 50-100 more times lol. I do have some questions on how taxes and setting up entities/using land trusts offset and protect your investments as a business and a rei. How does the amount of deprecation and expenses for your rei business outweigh your ordinary earned income and passive rental income from rents/garage/laundry/etc? Could you set the incomes into different entities? And would they be taxed differently (excluding FICA and medicare for passive)? And because I know as a business you can't always write off more of your losses than what your business brings in. How does this work as a long term investment?
You have wonderful questions that should be answered by a qualified CPA.
Peter, I have a question: How do you suggest managing the problem with
IRS "depreciation recapture" when we sell a property that has a lot of price appreciation after years of taking depression? I can find no way around this tax burden. What's the point in taking depreciation when the IRS will take it back -in lump sum-upon sale? Can you help with this or provide a video? Thanks so much!
I have been thinking about this as well. Depreciation helps you take the money TODAY. 25k tax back due to depreciation today is worth more than 25k in 27 years as value of money goes down. Thats benefit number 1. second benefit is you get cash so that you can go and buy more real estate and get bigger
Is Jones name need to be on the deed or or mortgage loan in order to qualify as full time real estate professional?
Peter, thank you for the video. There is one thing that is confusing me. If Dr Rob's RE business shows a paper loss of 90k and cash flow of 82k, isn't the 82k sheltered from tax but he cannot use the remaining 8k (90-82) of paper losses against his job income (250k) without the RE professional designation? The way you presented it sounds like he'd still have to pay tax on the 82k even though the business took a loss for the year.
You are correct Paul and my intent was not to say the opposite. The $82k is "tax free" because of the $90K in paper expenses. That additional $8,000 in paper losses would carry forward.
I am dumbfounded and speechless
Harris, I love your videos. However I do have this one lingering question. If you show very little taxable income or even a loss on paper, how can you get a loan, as banks want to see a good taxable income on paper to qualify you for a loan?
In Commercial Real Estate, you can obtain loans based on the property's income, not your personal income.
Depreciation (fiscal) passive loss.
Let's say I just created a new Microsoft and automated it - essentially meaning that it is just a source of cash flow for me.
If I invested in real estate, could I qualify for #3 if I portrayed myself as a professional and spent over 700 hours on it?
Or what would be the best thing for someone in that situation to do? (owner of companies)
great videos by the way! Thanks.
That would be a great question for a CPA because this is certainly a place where some people position themselves as qualifying but they don't.
Hi Peter, really a good video. I have a quick question. If I obtain real estate license, and don’t work 750 hrs in a year, will I still be considered real estate professionals.
Is there any way to contact you or your office.
Thanks
Syed
It seems Peter is missing CRE mortgage for the second column? Don't you write off interest rate on your commercial property loan too if you have W2 and some real estate??
I left my job. I have lots in 401k. Can I buy RE then use the losses to reduce my taxes, not including 10% penalty? Would that be recommended knowing the volatility of the stock market?
Why not consider transferring your 401K to a Solo/Indy 401K? This video explains: ruclips.net/video/x8BRlbAbOiM/видео.html
already watched that video. problem is all profits go back to solo401k. purpose is to get monies out to jump start RE venture. once I have one property cash flowing then I use that as leverage to get approved for more loans.
Hello. thank you so much for your video. I have a quick question.
currently I rented a space for my business and paid huge tax for last year.
is it a good to buy a property for my own business? do I still get all the deductions?
also do I buy with my name or business name? or doesn't matter.
I have a rental residential house as well.
thank you in advance.
Yes, it's oftentimes a great idea to buy the real estate that your business rents and yes, you can enjoy the tax benefits of that, such as depreciation (that you don't get when you rent).
I am buying an llc that owns commercial real estate. I don't want to trigger any "due on sale" clause, because I'm not sure I can "borrow" additional money if I don't qualify to assume the existing mortgage.
Here's the bigger picture; the llc owns 6 buildings. 3 are owned free and clear, 3 have assumable mortgages. The seller has accepted our offer to purchase his llc. If I purchased just 3 properties, the income from the buildings would not cover the operating expenses and debt service, (I'm using hard money). However if I buy all 6, and keep the existing financing in place, It's all affordable. (if I used "hard money" to buy all 6 it would not be affordable). How can I buy the llc and keep the existing financing in place, without having to qualify to assume the mortgage? Can it be done? Do I buy a membership share in the llc first, then within 6 months buy out the other member?
We do that all the time. Buying an LLC is a few simple documents. The issue is that you have to have the cash to pay for the LLC purchase. Obtaining a business loan to purchase the LLC is a different ball of wax altogether.
Commercial Property Advisors Thankfully, I already have the financing for the purchase. We are purchasing for $28,000,000.00 & assuming $29,500,000 in mortgage debt. I just want to structure the deal so the mortgage debt remains, without me having to qualify to any great degree. I've spoken with some brokers who make it sound impossible.
It'll depend on the loan documents; but technically, buying a membership in LLC is not a change in title so it wouldn't trigger a due on sale clause. However, commercial mortgage notes drafters are sometimes smart enough to include language that would consider a sale of the membership of the LLC to trigger the due on the sale. Furthermore, you should be connecting with an intelligent real estate attorney for a deal of this size and they can usually sort out such details.
Commercial Property Advisors I do have an attorney working on the sale. I want to learn what's going on behind closed doors and participate as much as possible. This isn't going to be the last purchase in my investment career, the more I learn about the process the better off I'll be. My partner and I enjoy listening to the information you share.
Does this apply to residential real estate also or only commercial real estate?
Hi Peter, do these same tax benefits that you gave in the example apply if you owned a NNN property? Could you still write off the same expenses?
You would have to report the triple net payments (taxes, insurance, etc) as income to be able to report those expenses.
Just bought my first duplex was wondering where I can get your free book?
Right here: www.commercialpropertyadvisors.com/book
So would you say it’s still better to own commercial real estate even if you are not making any money on it?
In your scenario #2 (F/T Job, some R/E), you mention the ability to have R/E write-offs for $100K and under earners, while none for $150K+. What about for those in the middle - $100,001-$149,999?
Anything below $150, 000 is all good. That's the cut off point.
God, I love you!
Are the same tax benefits on your third category apply to a CRE investor, managing his own RE portfolio, if he is single and only holds a master lease on a say 99 unit property?
Yes
Do you have to own the properties outright or do REITS count toward F/T real estate?
Reits do not count but syndications get some of the benefits
When I go to the county auditors web site to look up the last appraisal value for a multi-fam property often times it's considerably lower than the asking price. Asides from using a master lease agreement, is there a way to still give the seller their asking price but keep the appraisal value as is?
Are you referring to the idea of purchasing a property for significantly more than the tax appraisal but to do so in such a way that the taxing authority doesn't raise the tax appraisal as a result of the transaction?
Yes.
Master Lease or Quitclaim into a Trust or LLC and then purchase the interest in such Trust or LLC.
Can both spouses making over $150k/yr max qualify as RE professionals in their spare time as long as they meet the RE professional status requirements?
If I own 5 separate houses in different states. Would that quality as commercial real estate and receive the same tax benefits?
It's not about commercial versus residential; it's about being able to prove that the majority of your time is spent managing your real estate assets.
Well how would I make my income equal zero with wright offs. I mean wouldn't that mean I wouldn't be able to do anything that doesn't relate to my business
Does the 150k refer to total income from your job + cash flow from your properties? or is the 150k just your full-time job salary max?
Salary
Im sorry if this question is weird but In the last example with Dr. Rob, if he and his wife file jointly, isn't their total income technically still 250k together even though she's a housewife, in turn leading to them still not being able to utilize the tax benefits ? With your example we are assuming their incomes are looked at separately, but then how can they both utilize the tax benefits from the wife becoming a R/E professional?
When you are married, filing together, the beauty of that arrangement is that the wife can be considered a real estate professional and they both can enjoy the benefits thereof.
Does the wife has to be the owner of the commercial real estate to get the $90k write off?
I gotta wonder when these tax laws went into effect and who set them up because this sounds backwards as hell, but is perfectly legal. Like a tax code written by real-estate investors for other investors going back several decades rigging the game in their favor.
What you cynically call "rigging the game in their favor," the government calls "encouraging investment and entrepreneurship." You sound like you have a problem with it. Instead of complaining about it, invest in real estate and enjoy the tax benefits, the cash flow, the buildup of equity, and everything else that comes with it.
good save at 17:46. HA HA HA
Do you have to get a license to become a RE professional? Or just owning a commercial RE property and not working at other jobs qualifies you as a professional?
No
Dr Rob example… can children be the real estate professionals if Dr Rob is unmarried but has two kids and no alimony and child sppt (to keep example clean)? Im working on the protege videos :) So much fun learning.
If I work part time at a job and also do real Estate investing. ..do I still qualify as full time real Estate professiona?
Maybe. Ask your CPA.
Do depreciation of the property and write off of the interest on the loan count as loss’s that can be written against cash flow?
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-also how do you define yourself as a real-estate professional? How many hours a week must you work to qualify?
I know I am late to the party here, but it's a great video anyway. My only objection is referring to legal tax deductions as "loopholes" It implies that someone is doing something Congress and the law did not intend. The law is there to create incentives for people to invest.
Sometimes there are unintended consequences of tax code that really are loopholes. But I agree with your point. Thanks for sharing.
They're not "loopholes"...
Soooo I can make less than $150,000 I am my full-time job, and still take it vantage of being a real estate professional?
What about if "she" the wife earns 50k? Does the couple still get the benefit because she earns less than 150k a year and how does that play into being a "real estate professional"? Just trying to wrap my head around all the lil intricacies.
Why can't #2 have business write-offs? I have a full time job and my CPA allows me to write off meals, cell phone, internet, miles, conventions, training, etc..
Doesn’t tax advantages also apply to people who have their own business?
I don’t make w-2 income. I’m 1099, don’t I qualify for all the real estate tax advantages?
Yes, you may
For scenario 2, is it 25k depreciation on each property or total on all properties?
Total
Commercial Property Advisors for how many years can you depreciate the 25k for ? Is it just the first year or as long as your the owner of the commercial property? Thanks
Commingling my real estate assets is kind of scary. Donald Trump, and other successful real estate Investors have prenuptial agreements. I'm wondering what my options are being single or filing separately.
Ask a divorce attorney because they know all about how to segment assets
Commercial Property Advisors just found your RUclips page last week and I love it! I recently acquired the "for dummies" book. I look forward to reading the book, viewing the past videos, and your new videos.
Was she a real estate agent or a real estate “professional” ?
Hello,
Thank you for this informative video. How about someone who is a self employed doctor and makes more than 200k, instead of being a W2?
Thank you
When you are talking about commercial real estate depreciation is 39 years not 27.5 years.
An apartment building is 27.5 years; if it is NOT an apartment building but any another commercial building, it's 39.5 years.
How can someone become your mentee?
Apply to my Protege Program here: www.commercialpropertyadvisors.com/protege-program
What if she divorce you and take half
What kind of solution to any problem would getting married be? I would think that's a problem, not a solution...so you're telling me you would rather get married in order to save in taxes? You must be joking sir!! Hey, to each their own I suppose
Those are the laws unfortunately . It’s not his rules .