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How to Use Real Estate to Avoid W2 Taxes
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- Опубліковано 4 сер 2024
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Here's are some tax deduction tips that can help you save more on paying taxes.
In this video we will discus: How to Use Real Estate to Avoid W2 Taxes
- Real Estate Professional Status
- Depreciation
- Short-term rental real estate
- Rental property tax deductions
Watch this video to avoid overpaying to Uncle Sam and to get educated on how to leverage the tax code!
*Disclaimer: I am not a financial advisor nor am I an attorney. This information is for entertainment purposes only. It is highly recommended that you speak with a tax professional or tax attorney before performing any of the strategies mentioned in this video. Thank you.
![How to Use Rental Losses to OFFSET W2 Taxes! [Part 1]](http://i.ytimg.com/vi/1a38vrvO-ko/mqdefault.jpg)
such a legend. man the tax code was invented for us to utilize not fear. thank you for doing your research and delivering to us. the value you bring with every video is enormous. Thank you Karlton
I am very much "getting" this and am super stoked that I stumbled on your mistakes with LLC's video with impeccable timing. Thanks for making this all available!❤
That was a fantastic video! You broke it all down in a way that was super easy to follow, thank you!
I am 46 and working for 22 years now. This is by far the most useful video for tax saving on UA-cam, period.
You have a gift for teaching. I’ve watched many other videos but you know how to connect everything in a way its much simpler to understand. Glad i found you. Thanks
Thanks for your comment ⬆️ Reach out to me for consultation and more tips on how to build your finances ✉️,
I’ve done research over the past year so I already knew this but the way you explained it made it so much easier and would have saved me countless hours if I saw this first. Keep crushing it brother!
Very well done, Karlton. You take boring (but important) topic and make it fun to watch. BRAVO.
agree
This was a terrific video to bring together so many pieces! I used to send clients 5 different UA-cam videos to explain what you have in this one clip. Thank you.
Just stumbled upon your video and you explained everything in such detail and simplified for even me (not a math whiz or investment whiz)! Thank you! Thank you! Thank you! I liked and will be following you to learn more! Sharing with my teens so they can have a head start and do more with their money than I ever did! GOD bless you mightily! ❤❤❤❤
I am only 17 and turn 18 in a few weeks. Have learned so much from you and can't wait to start using all the information you have taught me. In the future I plan on being one of your clients.
Good luck youngster. I wish you much success in life with your rentals and your businesses.
Buy a duplex, triplex, etc as your first home. House hack. Live in one side and rent out others. This will allow you to save money for another property. Rinse repeat. Wish I did it long time ago.
@@KayakDIY bad advice. Duplex comes with a lot of headache with maintenance and tenants especially if they don’t like each others.
Single homes in good neighborhoods is the best. Don’t ever invest in the hood. You can also buy distressed homes and fix them ( but if you don’t know what you are doing contractors might still money from you). I now buy ready to use and do minor works.
Learn the tax systems and not just be a client let him teach what you’re not gonna ever have a chance to learn in school.
@@Anonyme67 wrong
Exact video/training I was looking for, for a long time. I learned more in this one video than all the videos I watched in the last 6 months. Thank You
The only video on you tube that breaks this down so plainly and decisively. Thank you!!
Very informational video, can't thank u enough for sharing the info. The way you explained it made it so much easier to understand all jargon. keep it up.
You are the best! I love how you explain things. I just discovered your channel about a week ago and I’ve been binging on your videos. I love this one, especially. But I love them all actually. ❤❤❤❤❤❤❤❤❤
I love your channel. I learn sooo much. You break things down so well. Thank You!
Straight to the point, great video!
You explain this so well! Greatly appreciate it.
New to real estate investing and I can't get enough of this guy. Keeps it simple and explains things well. Awesome service you are doing!
You are a genius my good sir!! I thank you for all your videos!! I'm a new business owner and learning all of this the hard way till I stumbled upon your videos. I seriously love you my friend!😁
Karlton, this video was amazing. This is exactly the kind of information I have been looking for. Everyone needs to listening to this.
Thank you, KD for another amazing and easy to understand video. I am learning SO much as I prepare to become a business woman. TY
Very good video. Will watch multiple times. Would love to be able to talk more about this topic.
Dude, thank you so much! You’ve got a supporter for life!
This was everything. I even laughed out loud a few times when you dropped major gems. I am soo thankful for this. I feel like I'm understanding a foreign language. Great job!
Really great explanation. I had read bits here and there but this is a really great primer to give people the base understanding of these concepts
Omg! Where have you been my entire life? I just saw this video and looking forward to seeing the rest, I'm already loving you. Great, awesome content!!!
Thank you! I look forward to seeing you on the challenge www.thetaxfreewealthchallenge.com
I loved the way you presented this information - the graphics and visuals really helped me understand the topic better.
Wow. You put it all together so beautifully! You are great!
I watched til the end. This is gold. I read this, but I love you explanation!
Great information right here! Brandon hall real estate CPA has some great info on this too. Thank you karlton!!! Keep it coming!!!
This was really good. Thank you
This is phenomenal!
Same here. Already knew about this for the past 10 months. Your video made it very clear and easy to understand. Great video. I must take action.
I love this channel. I’ve learned so much! Thank you.
This guy is just too smart. One of the sharpest people that I have ever come across. Keep it up man!
I have subscribed already. I will share the news to others.
🙏🏽👍🏼✊🏽
Karlton, you are just amazing and this is the most valuable video I have seen on UA-cam! Thank you!
Awesome video. Very informative. Thanks for showing us the power of leveraging.
Great info! Thanks for taking the time.
Great content Karlton! Thank you so much!
I've been thinking about this and now you just broke it down in such a easy way that I want to learn more about it
Feeling so lucky to have found your Channel. Thank you
Amazing video! Love your passion about teaching this
You are literally blow mine mind right now Karlton. I have been thinking about opening a business, now I have a clearer view on what to do thanks to you...
Love the energy and knowledge!
Karlton, great content! Keep them coming Sir...
Great content. I am not able to use this YET. However, once I build my infrastructure I will definitely be looking into this strategy. Thanks for sharing your studies.
I spent 10 years in the consulting practice of a large accounting firm. I am not saying this video is wrong, but one BIG thing this video does not mention is that the depreciation taken lowers your basis in the asset. When you sell the asset you now have a higher gain and pay more taxes. There is something called 1250 recapture which taxes that portion of the sale at higher rates than normal capital gains. You CAN benefit from the rate arbitrage between ordinary losses and 1250 gains, but because depreciation was taken more gain will be recognized later and at a higher rate.
Agreed but that's when you need to get into 1031's, stepped up basis, Deferred Sales Trusts, Delaware Statutory Trusts, Spendthrift Trusts etc
@@samuelhartzog7209 and then you might avoid taxes, but spend a mountain of money on an army of attorneys and title companies to draft and perform all of this. And 1031 doesn’t eliminate anything, just kicks the can a little farther down the road.
@@samuelhartzog7209can I hire u
Wow thank you so much for this mind blowing content! Need this badly. You got a yourself a new subscriber.
The “excess business loss” rules in IRC 461(l) were amended by the CARES Act in 2020. These rules prevent you from using business losses from pass through entities (partnerships, s-corps, LLC’s, sole proprietors. Etc.) to offset W-2 income. It does not matter how active you are. If you exceed the income threshold you cannot offset W-2 income with business losses.
Real estate professional status does help here
@@zakshuman8450 IRC 461(l)(6) says that the excess business loss rules shall be applied after the limitations of IRC 469. IRC 469 is where the passive loss rules are codified and includes the “real estate professional rules”. The excess business loss rules are generally agnostic to the income type. The only exclusion to the excess business loss rules I know of is certain farming income/losses for certain years. For a single taxpayer the most business losses you can uses in a year is $250k (plus a little for inflation). So if you have a 500k W-2 and a real estate or other business loss of 500k, you would still owe tax on 250k. This is the w-2 income minus the maximum business loss (250k for single for 500k for married filing jointly). Any excess loss is carried forward as a net operating loss which has other limitations in subsequent years.
@@paulmorrow8372 but this only applies to those owing over $250k on W2 taxes correct? If so everyone under that threshold should still be able to do what the guy in the video is explaining.
WELL ACTUALLY ERASING 250K OF YOUR W2 INCOME NOT 250K OF TAXES, ALL DUE TO THE BUSINESS LOSSES GAME. BUT WHAT THIS GUY IN THE COMMENTS IS SAYING REALLY HAS NO REAL RELEVANCE WITH 99% OF THE POPULATION. THIS 250K LIMIT I’VE NEVER EVEN HEARD OF IN MY 7YRS OF DOING THIS, SO I HAVE TO LOOK INTO THAT TO SEE IF ITS BOGUS OR NOT. NOW EVEN IF IT WERE TO BE TRUE THAT YOU COULD ONLY WRITE-OFF $250K OF W2 INCOME FROM BUSINESS LOSES, THAT’S NOT INCLUDING THE OTHER WRITE-OFF’S THAT’S NON BUSINESS RELATED. YOU CAN VERY WELL WRITE-OFF ANOTHER $100K IN NON-BUSINESS REALTED WRITE-OFF.’S AGAINST YOUR W2 INCOME. AND WIPE OUT $350K OF W2 INCOME. THEN YOU COULD START AGAIN WITH YET A 2ND SEPERATE BUSINESS WITH WRITE-OFF’S. AND ON AND ON AND ON…. THE THING IS YOUR ALSO NOT PAYING ANY TAXES ON THE BUSINESS INCOME IN ADDITION TO THE W2 INCOME. AND EVEN IF YOU DO WIND UP PAYING ANY TAXES ON THE W2 INCOME, THE OVERALL TAX SAVINGS WOULD BE ASTRONOMICAL IN COMPARISON TO THE NONSENSE TAX THAT YOU’D PAY.
Can we schedule a 1x1 meeting ?
Oh snaps! 🥳🤯 Loving your videos. Thank you for the knowledge.❣️
great stuff. much appreciate ya!
Your awesome! Thanks for the valuable info. 🤑 Have a blessed day 🙏
Awesome!! Thanks, will get in touch with you in time !!!
Love learning with you
omg thank you so much for this information. i saved it and will be watching again probably when i get lost. i bought your moms course as well and it really breaks the tax code down.
I am trying to do this now, it is amazing how many CPA's do not know about this and are fixated on your method without the loophole or know nothing about it. I am actually teaching CPA's when I talk to them and I am nothing close to a CPA or tax professional. I just watched KD. Wish your firm KD was more affordable for those just starting off though. Would love to use this guys firm but they want at least $10k.
Thank you for the information. I appreciate it!
By far the best explanation about this topic. Thank you Karlton
love it thanks for sharing!
Mind blowing content! Thanks Karlton for such valuable insight.
One of the most important videos I watched about how to leverage RE tax benefits... Thank you so much for putting this together. Super helpful!
Glad you enjoyed it!
Hi Karlton. Thanks for sharing this information. I am thinking about investing in a 37 unit JV out of state. All 6 partners have a percentage of ownership, voting rights, sign on the loan and an active role. My role would be to prepare and update the financials. Would the hours spent in this role count towards material participation? Thank you!
Thank you for your content man. Such Valuable Information
This was very informative Karlton. You earned a subscriber!
What a great primer on this subject and really helps me a lot as a real estate professional and somebody that has an Airbnb. It seems that I qualify two different ways to move this passive losses over to my active income. Thank you so much for your detailed analysis of this and helping me to be more crystal clear on it. I always wondered how that was done!
Keep in mind that whether you're a real estate professional or it's a short term rental, to qualify for the passive loss rules tax benefits you still have to materially participate. That means if you just have a property manager managing it, you probably won't qualify. Just a heads up on that.
Wow!!! You are such an inspirational guy!!! Love hearing you speak the truth and nothing but the TRUTH!!! Keep it going KD!!! :)
Glad I have found Carlton and the time to absorb his knowledge. Carlton, you just gave me chills with this one. You just saved me so much stress, time and money!! Thank you! I will most definitely be an avid subscriber!
Hey Karlton, I’m patting myself on the back with a smile. 😁 thank you! 💪🏽
What a smarty. 🤓 Great information - thanks for sharing your knowledge!
Literally Just changed the trajectory of my entire year! God Bless your ministry. Thank you brotha👏🏾
Okay Karlton, you got my interest. Well explained Brother. I’m subscribed!!
Thank you!! I just subscribed to your channel.
I love how hyped Karlton gets about his own knowledge 👏 awesome!
Great video, super helpful.
One question, does this method work for an AirBnb (RV like tiny house ) type of property that is on the same physical (land) property as a “real house” with a foundation?
Unfortunately you generally can't qualify for the STR loophole in that situation in most cases if the house is a long term rental. That would be considered the same thing as having multiple "units", and when it comes to calculating the average stay for the STR qualification, you have to average the stays of all units on the property (the average is actually weighted by the amount of income per unit, so I'm simlifying it a bit here). If you have a long-term portion/unit, you generally won't qualify.
Thank you Karlton for keeping dropping gems like these. I'm glad I found your channel and I subscribed immediately. Now a short term rental is pretty much a Air B&B you can rent out only 7 consecutive days or less at a time? Is that correct? I currently don't have a rental property but im looking into to it. Im a W2 worker and My federal tax liability for this year was $22k and another $8k for state. I would be so happy if I didn't have to pay any of that lol
He said an “average“ of 7 days or less. So if you don’t meet the first two qualification rules to be a REP, then you can ‘materially participate’ in owning a STR as that mode of operating an investment property does not fall under passive income. It’s active income.
Hey brother amazing video love the knowledge. Does this apply to vacant land as well? If so or if not I’m sure there’s a way you should do a video on land specifically. Thanks keep killin it 💪🏾
Land is NOT Subject to Depreciation.
Thank you. Can’t wait to have some one time with your team.
Love it dude, looking forward to our call next week.
Hey Karlton thx for the killer content. Does this short term rental strategy still apply if the property is 50/50 with a business partner on the title?
Wow 🤩. You are something. You are very honest and nailed everything in simple terms.
Love it. Just subscribed.
Great content Karlton knowledge sure is power…….
Great video brother!
Awesome vid! My first of yours to watch.
Quick question: can this help in any way for real estate wholesalers?
So glad I am subscribed to you
GOAT ... that's all. I've been learning taxes for a little while but this my friend?! Finding your channel I've struck GOLD! GOLD YOU HEAR ME??
I cannot say thank you enough for all the amazing knowledge! Curious does this apply to short term rentals on short term nightly boat rental via Airbnb etc?
its the same thing its ordinary income
ua-cam.com/video/z2OFM3UEUJM/v-deo.html
There's limitations to all of this tho. Your tenants have to be less than 7 days on average (essentially must be airbnb or the like). I'd also assume that you can only depreciate an item in your home once. Meaning if you depreciate over a short number of years, after those years have passed, you can no longer claim a loss every year. How many airbnb rental properties truly have 200k per year of itemized depreciation as in the example? This video is a good concept but only applies to a small subset of people and most likely does not generate as large of a tax write off as the example implies
This guy is full of bad advice.
It's not bad advice but the original comment is correct.. this will work in year 1. Once you've done the cost seg you need a new property to do it again. Also, the STR is work. And much riskier than owning a straight up rental which would be considered passive.
Unreal content. Just subscribed.
Content like this is pure gold! I already have an email out to my tax pro to see if this is something we can use in our scenario. Gotta take action!
Man your content is A1. Thank you.
I’m glad I found your channel. Could you please talk about why the more expenses I enter the more taxes I need to pay? Thank you!
I think you misunderstood something there. Having more business/rental expenses will reduce your net income, and so that will reduce the amount of tax you need to pay.
Thanks for the info!
Great video. Very helpful. Thank you
You are God sent. Thank you for allowing Gos to use you for those of us who need your expertise🙌🏽🙌🏽
I have been watching tons of videos and this one is the MOST AMAZING ONE!! I was finally able to understand how this really works. THANK YOU!!!
I do have a question: I have had hard time finding a professional real estate CPA to help us with our taxes, the few recommended by people I know that are in the business are not taking new clients. What is the best way to find one? Does your firm offers this service? :) Thanks!
You did great explaining. Amazing. Thanks a ton.
This is amazing. Thank you for sharing. Is it safe to assume to file on schedule E?
Super informative video!
😱🤯 Karlton you blew my mind. Thank you so much.