Tax Smart Real Estate Investors Podcast cover image

Tax Smart Real Estate Investors Podcast

268. How To Turn Rental Losses Non-Passive Without Material Participation with Justin Shore, EA

Apr 9, 2024
Tax expert Justin Shore joins the podcast to discuss the backdoor REPS strategy for real estate investors, allowing the transformation of rental losses into non-passive income. They explore maximizing tax benefits, utilizing passive income against losses, and navigating the complexities of the passive activity rules. The episode highlights innovative strategies for offsetting W2 income with real estate losses and introduces the backdoor REPS tactic in real estate investing.
38:29

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Utilize passive losses from prior years to reduce tax burden without requiring real estate professional status.
  • Differentiate between backdoor reps and lazy 1031 strategies to choose the most suitable tax approach for property reinvestment.

Deep dives

Understanding Backdoor Reps Strategy

The backdoor reps strategy aims to help real estate investors offset their ordinary income with real estate losses without needing to qualify as a real estate professional. By utilizing passive losses from prior years, acquiring new properties with bonus depreciation, or doing a retroactive cost segregation study, investors can strategically reduce their tax burden. This strategy hinges on recognizing the difference between capital gains tax rates and ordinary income tax rates to maximize tax benefits.

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