Karlton Dennis, a tax strategy expert and real estate investor, joins to unveil the secrets behind how the wealthy minimize their tax burdens. He breaks down the impressive benefits of depreciation and cost segregation studies, emphasizing their impact on tax savings in real estate. Listeners learn about the IRS requirements for real estate professionals and actionable strategies like using self-directed IRAs for retirement wealth. Karlton's insights inspire both seasoned investors and newcomers to leverage the tax code for financial success.
Using depreciation and cost segregation studies can significantly lower your taxable income when investing in real estate.
Understanding how to qualify as a real estate professional is crucial for leveraging tax benefits effectively and maximizing deductions.
Deep dives
Understanding the Tax Game
The concept of taxes is framed as a game that the wealthy have mastered, enabling them to leverage the tax code effectively. Many wealthy individuals take full advantage of real estate investments, which provide substantial tax advantages compared to other ventures. This advantage arises primarily from depreciation, which allows property owners to report a paper loss on their income, thus offsetting their taxes on earned income. Learning these strategies is crucial for anyone seeking financial growth, as engaging with the tax system can lead to significant savings.
Depreciation and Cost Segregation
Depreciation, particularly in real estate, is a significant deduction that can substantially lower taxable income. When acquiring a property, only the building's value (not the land) qualifies for depreciation, which is typically calculated over 27.5 years. However, investors often utilize cost segregation studies to accelerate this process, allowing them to deduct a significant portion of the asset's value in the first year alone. For instance, a $1 million property can yield up to $300,000 in deductions during its first year, highlighting the strategic benefits of intelligent property acquisition.
Becoming a Real Estate Professional
To harness the full potential of real estate tax advantages, one must qualify as a real estate professional according to IRS guidelines. This entails demonstrating at least 750 hours of real estate management in a year, which averages to about 15 to 18 hours weekly. While it may seem manageable, this qualification might be challenging for those with full-time jobs unless they have additional support. Alternatively, strategies such as investing in short-term rentals can allow individuals to utilize tax benefits without meeting the stringent real estate professional criteria.
In this video, I'm chatting with Karlton Dennis. He goes over how you can use depreciation and cost segregation studies to create significant tax advantages. Discover why real estate offers unparalleled tax benefits and learn actionable strategies that you can implement today to minimize your tax liabilities and maximize your income.
Whether you're a seasoned investor or just starting out, this video is packed with invaluable knowledge that can transform your financial future.
**What You'll Learn:** - How depreciation works and its impact on your taxes - The benefits of cost segregation studies - The role of a real estate professional in tax planning - How to qualify for significant tax deductions - Insights into self-directed IRAs for real estate investments
Karlton shares his deep insights and practical advice on leveraging the tax code for real estate. We also go over how to offset your W2 and 1099 income.
Connect with Karlton! Website: https://karltondennis.com/ IG: https://www.instagram.com/karltondennis/?hl=en YouTube: https://www.youtube.com/channel/UCEc3bAbOtPEUIgpNkViF_PQ
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About Ryan Pineda:
Ryan Pineda has been in the real estate industry since 2010 and has invested in over $100,000,000 of real estate. He has completed over 700 flips and wholesales, and he owns over 650 rental units. As an entrepreneur, he has founded seven different businesses that have generated 7-8 figures of revenue.
Ryan has amassed over 2 million followers on social media a...
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