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Raise Capital Legally
How to Maximize Tax Savings in Real Estate Syndications
Dec 12, 2024
Ryan Bakey and Austin Prevost, both CPAs specializing in real estate taxation, reveal crucial strategies for maximizing tax savings in real estate syndications. They clarify the requirements for achieving real estate professional status and discuss how cost segregation can accelerate depreciation deductions. The duo emphasizes structuring syndications for tax efficiency and the benefits of carried interest, enabling general partners to minimize taxes effectively. Their insights are essential for both limited and general partners seeking to optimize returns.
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Quick takeaways
- Understanding the requirements for real estate professional status is crucial for GPs to leverage significant tax advantages by offsetting losses against ordinary income.
- Utilizing cost segregation studies enables investors to accelerate depreciation deductions, offering immediate tax benefits that enhance cash flow in early ownership years.
Deep dives
Taxation Insights for Limited Partners and General Partners
The episode delves into the distinct tax implications for limited partners (LPs) and general partners (GPs) in real estate syndications. LPs often misunderstand how rental losses can be utilized to offset their W-2 income, which is a prevalent misconception, potentially leading to unexpected tax liabilities. Conversely, GPs, who are actively involved in the operations, can qualify for real estate professional status if they meet certain time commitments, allowing them to offset losses against their ordinary income. Understanding these fundamental differences is crucial to formulating effective tax strategies that optimize returns for investors.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode