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Read Transcript for “How To Sell The Depreciation On Your Real Estate Investments”
Let me explain how you can use the depreciation on a property to your advantage.
“How can I share or give my tax deductions from one of my rental properties to a new partner? Let’s say I don’t need the write-off, which means I can share or give the write-off to my partner so that they can get more on their tax return to reinvest with me on another property. I’ve managed my own properties for over 18 years. My first property was in 1976 when I was 21, and from there, I’ve found two more homes and a four year unit over the next three years that I fixed up back then. Thanks, Joe.” – Frank Lerby
Joe: Frank, you can break up the tax deductions. Let me say right up front here that I’m not a tax attorney, and your situation or your partners situation may be different because it makes a difference on whether they’re a full time investor or they’re not or in a full time real estate profession or not, so they need to talk to their attorney about this. The way this has been done in the past is to put it into an LLC. Then, you can break up the ownership of a property any way you want to.
Joe: And, you can sell off pieces of it. You don’t just have to give it to them – you can sell it to your partner or they can loan you money without his collateral. There are a lot of good ways that you can use the tax deductions and the depreciation on a property.
Joe: Don’t underestimate the value of depreciation. If you own a lot of properties, your depreciation on those properties doesn’t cost you anything to get, but it can dramatically reduce your income.
Joe: If you’re a high income earner or you own a lot of rental properties, it’s a wonderful thing because your rental property depreciation will offset a huge amount of your income and make it possible for you to pay very low taxes. That’s why people who make a lot of money don’t pay a lot of taxes. There are lots of opportunities for them to save. Anyway, I hope that helps.