Selling is for donks. Leave it to heirs who get a stepped up basis at death. I think.
Also there is some sort of exchange thing that people do to kick the can down the road even farther.
Admittedly, I’m way out of my depth here. Just starting to learn about real-estate investing since I’m way too highly weighted on STONKS.
The custodian that manages the RSUs might have an option to change withholding when they vest. Mine have always been taxes relatively correctly, but I’ve seen options where I can change how tax is withheld (I don’t really remember what those options were though).
This is really the key to the whole thing. It’s called a 1031 exchange.
"A 1031 Exchange is an exchange of like-kind properties in the United States. Put simply, a property being sold is not subject to capital gains tax until it is eventually sold without reinvestment of the proceeds. Essentially, this allows not for the avoidance, but the deference of any taxable gains on the property that is first sold.
In a 1031 exchange, both properties must be held for business or investment purposes and must be located in the United States. Although they must be similar in nature, the quality of the properties is irrelevant. Corporations, partnerships, limited liability companies, and trusts are eligible tax-paying entities that can establish an exchange under Section 1031."
https://www.cwscapital.com/what-is-a-1031-exchange/
“One of the major benefits of participating in a 1031 exchange is that you can take that tax deferment with you to the grave. If your heirs inherit property received through a 1031 exchange, its value is “stepped up” to fair market, which wipes out the tax deferment debt.”
So, if you’re rich and have good advisors you buy an investment property, write it off on your taxes until you’ve fully depreciated it on paper, and then flip it for another property. Rinse and repeat until you die and your heirs get a stepped up basis on whatever property you had at the time and the IRS never gets to collect all of that deferred $.
So I am an Enrolled Agent who works for a tax software company. I see the following scenarios all the time. Buy rental properties. Profit. Then never pay for the unrecaptured Section 1250 recapture gain that normally happens from real estate sale because they exchange properties forever. They acquire more and more until they die. Then their kid take over and rinse and repeat.
You’ve got it right.
Say I have $10 million. It’s pretty easy to leverage that in to $40 million of apartments at 75% loan to value. This would be expected to generate income of about $2 million per year, or $500k after debt service. A 5% return. Seems…ok but not great.
But you depreciate on an approximate 40 year schedule, or roughly $1 million per year. Now you have $500k of cash flow plus a $500k tax loss you can offset against ordinary income! This is complete bullshit! Or say you have a massive IRA and you have to take RMDs. You can take them tax free up to the amount of your fake losses.
In addition, that debt service includes amortization, so you’re paying down the principal balance. Eventually you run out of depreciation and you may have to start paying taxes on the income (or depreciation recapture if you sell). But nope! Just do a 1031 exchange and start the whole thing over again.
There are also endless estate tax avoidance avenues here that are probably too boring to detail but believe me, they work.
Does the depreciation here anticipate that these buildings wont be standing in 40 years or that the depreciated amount is being reinvested in the property? I can see how a system like this would lead to properties being uncared for and rental conditions deteriorating.
Nice self-own bro. LOL a guy this dumb making that kind of money on a fucking real estate youtoob channel.
https://twitter.com/realmeetkevin/status/1516556628312559620?s=21&t=oxQOwNuiiP8aoZdBPmaB-A
Thanks for that. Also, LMAO what a country. So broken.
It must be pretty good business:
https://finance.yahoo.com/news/blackstone-adds-bet-student-housing-122141729.html
I’m hearing the ghost of an old accounting professor whispering “Taxable to the extent of boot”.
[shivers]
Thanks.
I still don’t the the real estate professional part of it. Does above only apply if you are a real estate professional?
Hard to believe WSJ wrote a whole article about a white girl not getting into Harvard (but still getting a scholarship to ASU)
The entire thing is worth a read imo, but here are some choice excerpts.
She took her first advanced-placement course as a freshman, scored 1550 on her SATs as a junior at McKinney High School near Dallas and will graduate this spring with an unweighted 3.95 grade-point average and as the founder of the school’s accounting club. Along the way she performed in and directed about 30 plays, sang in the school choir, scored top marks on the tests she has so far taken for 11 advanced-placement classes, helped run a summer camp and held down a part-time job.
Ms. Younger, 18 years old, was cautiously optimistic when she applied to top U.S. colleges last fall. Responses came this month: Stanford, Harvard, Yale, Brown, Cornell, University of Pennsylvania, University of Southern California, University of California, Berkeley, and Northwestern all rejected her.
For students such as Ms. Younger, the odds are particularly long. She is a middle-class white female from a public high school in Texas who wants to study business. Each characteristic places her in an overrepresented group, said Sara Harberson, a former admission officer at University of Pennsylvania and now a private college-admissions counselor.
“The middle class tends to get a little bit neglected,” said Hafeez Lakhani, a private college counselor in New York who charges $1,200 an hour. “Twenty years ago, Ms. Younger would have had a good shot at an Ivy League school.”
She was working to improve her marks when the pandemic arrived and the school froze grades during the second semester. She received her first (and only) B’s. They pulled down her GPA. She is now ranked 23rd out of 668, or in the third percentile, she said.
Of the 12 schools to which Ms. Younger applied, she was wait-listed at Rice University and accepted at the University of Texas, Austin—but not to the business school. She plans on attending Arizona State University to study business on an academic scholarship. The acceptance rate there last year was 88%.
Anyone have any experience with these platforms where you can buy shares of farmland. Examples include AcreTrader, FarmTogether, and HarvestReturns
Seems like a good way to diversify, but right now my main hang up is that they aren’t tax-efficient if you have to hold them outside of a tax-protected acct. Any other issues?
Holy shit.
Any pointers for getting by on $4.5 million a year?
That one actually seems reasonable, numbers aside. Huge life heater, exceeding his own goals for himself, making insane money.
That’s actually a tough spot.
I mean I think you keep going at that job for like 3 years past when you think you’ve achieved your retirement goals because it just gives you a massive amount of lifestyle padding in retirement and who knows if this opportunity to make this type of $$ will come along if you decide to want it after trying out retirement.
What industry are VP’s marking $4.5M? Tech, software, finance? I’ve seen VP salaries at my previous Fortune 500 companies and even including generous stock and bonuses it’s hard to see it being much past $1M.
It seems higher than typical c-suite comp (outside of CEO). But maybe tech is different.
Seems like a legit-ish question within a humblebrag.
If he could reach all his goals with 10M, in his spot, I’d just get to 15M to be really worry-free and call it a day. So, a couple extra years.