How to Use Passive Losses to Offset Capital Gain Income

Instead of doing a 1031 exchange when you sell one of your properties or if the syndication liquidates and gives you this large capital gain you use passive losses to offset the gain on sale in the passive losses. What happens is they unlock up to the amount of the gain but they actually can offset your ordinary income so the losses that you receive through the hold period are ordinary in character and whenever you liquidate that character does not change. You can also invest in businesses if there were such opportunities that you're exposed to and not play an active role in that business as long as it's structured in a way that produces passive income for you.

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