REI ROCKS! PODCAST

Listen to another great episode with industry leaders in real estate.

Taxation in Real Estate with Michael Plaks​

In this 3 part series, Michael highlights his experience in Taxation and discusses how it applies it in Real Estate to help deals be more profitable.

Part 1

Things you will learn in this episode:

[00:01 – 07:29] Opening Segment
● I share some of Michael’s amazing achievements
● Michael talks about his background and his specialty
● Michael talks about the new rule of the conversation

“You can’t avoid debt but you can avoid tax .”

[07:30 – 25:38] 10 Yes/No questions 
● If there is a couple who makes a 200k salary between husband and wife, can they reduce their tax with tax rivals from rental properties?
● Michael explains the taxation system in Real estate
● If we buy rental properties and pay 100 grand for it, and in 5 years it will double in value, is it possible to avoid capital gain taxes when we sell it? 
● If you buy a fixer-upper to rebuild sales and do construction on it, do we get long term capital gains?
● State income taxation
● Self-employment tax
● Strategies to mitigate and anticipate Flippers high taxation
● Can we lend out IRA money to another real estate investor?
● We both have full-time jobs, can we commodify real estate professionals if one of us is obtained realtor-wise?

Part 2

Things you will learn in this episode:

[00:01 – 05:29] Become a Real Estate Professional
● We both have full-time jobs. Can we commodify real estate professionals if one of us obtains a realtor license?
● Michael talks about federally licensed Enrolled Agent (EA)
● A real estate professional has to pass a certain test

“Never sell or buy anything for tax reasons. Don’t forget the bigger picture, the bigger picture is live your lifestyle the way you want it, and make money in your business.”

[05:30 – 17:14] Rental Property Tax Deduction
● I have rental properties, I buy new appliances. Can I deduct the full cost of appliances right away?
● Can I file an amended tax return to claim depreciation on a rental property for the last three years?
● Can I deduct 100% of the property taxes on my rental property if they are higher than the new tax law limit of $10,000?
● If I get a mortgage for a rental property to buy a boat, can I deduct the interest?
● If I turn my house into a rental for two years, then move back in for two more years do I have to pay taxes when I sell it?

[17:15 – 25:54] Business first, Taxes second
● Never sell or buy anything for tax reasons
● Michael talks about REITax  Corp
● If someone has decided to buy a duplex or a quad and they are going to house hack it, how is the tax on that treated, will they be able to deduct for all the units?
● If I get a mortgage for a rental property to buy a boat, can I deduct the interest?
● If I turn my house into a rental for two years, then move back in for two more years do I have to pay taxes when I sell it?

Part 3

Things you will learn in this episode:

[00:01 – 05:29] Real Estate Professional Documents
● How do I document what I’m doing so that I could be considered a real estate professional?
● Don’t put it on Quickbooks; it is a too complicated system and not ready for Real Estate Investors

“Better off willing to pay 45% of the income to tax, than not making any money at all.”

[09:27 – 17:14] Bonus Depreciation Question 
● Last year I had a bonus depreciation, but neither one of us is a real estate professional, so we could only deduct it on the passive income receipt. Does it have to be the properties associated with deduction, or can it be used on some of our other rentals?

[17:15-25:54] Income vs Tax
● Michael shares a case study that he presented in his class
● The amount of tax that someone is paying reflects the amount of money they’re making
● Start reaching out to professionals to avoid costly mistakes

You can connect with Michael on LinkedIn, and Facebook.

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