The Nick Huber Show
Ep 146: What is Real Estate Pro Status and Why Does it Matter?
May 27, 2024
Explore the benefits of bonus depreciation and the importance of qualifying as a real estate pro. Learn how real estate professional status can help balance income and offset losses. Gain insights on leveraging depreciation benefits for tax advantages and renovation strategies.
09:17
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Quick takeaways
- To benefit from bonus depreciation in real estate, becoming a real estate pro is crucial to offset active income with real estate losses.
- Real estate investors can maximize tax benefits by leveraging depreciation through cost segregation studies and qualifying as a real estate professional.
Deep dives
Tax Advantages of Real Estate: Active vs. Passive Income
Real estate offers significant tax advantages through strategies like cost segregation and 1031 exchanges. The distinction between active and passive income is crucial for tax deductions. Active income, such as W2 job earnings, cannot be offset by passive losses unless one qualifies as a real estate professional. To qualify, individuals must meet specific time requirements in real estate activities, unlocking the ability to offset active income with real estate losses.
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