Self-storage investor Paul Moore explains how commercial real estate owners can obtain low or no taxation due to tax incentives provided by the US government to encourage investments and therefore job creation and economic growth
- Hiring a tax strategist which focuses on real estate rather than relying on a traditional CPA
- Direct ownership or partnerships (syndication) to pass through depreciation losses
- Cost segregation studies to reduce the usual straight-line depreciation schedule and have most non-land assets written-off in the first years of the investments.
- Returning OF investment rather than return ON capital
- Writing off maintenance and repairs in current year versus capitalizing (Section 179)
- Refinancing to pull out “lazy equity”. It also lowers risk and enables new investments
- 1031 exchanges enables to roll over pending capital gains to the next property if reinvested within 6 months. This can be done forever and heirs may not pay taxes on these deferred gains as the property values will be re-assessed at the time of the death of the owner.
- Using deferred sales trusts (such as the Delaware statutory trust)
- Invest through a self-directed IRA or 401k plan
- Enjoying the Qualified Real Estate Professional status (at least 750 hours yearly dedicated to real estate as the main occupation of at least one spouse) to offset regular income with depreciation losses.