I had a quick question - hypothetically, if I had capital gains on stocks, could I theoretically purchase a property that same year and do bonus depreciation from the property to offset my stock capital gains taxes?
For instance, let's say I have $50K capital gains tax. If i purchase a property worth around $250,000, and recognize 20% depreciation ($250K X 20% = $50K) through cost segregation, bonus dep, etc, would I effectively pay zero capital gains on my stocks? Or are real estate depreciation only used to offset real estate income?
Cost Segregation Expert and Investor · Lakewood, NJ · Member since 2017 · 1k+ posts · 1k+ votes
7y
@Jung Won Kim The short answer is no...but it depends.
For someone who is not a 'real estate professional' deprecation can only be used to offset income from real estate (the exception is if one's Adjusted Gross Income AGI, is less than $150,000 there is a certain amount that can be used to offset other income).
If one is a 'real estate professional' they can use the bonus depreciation created through cost segregation to offset all of their income, and if there is any depreciation left over after that, it can be used to offset capital gains.
Capital gains tax from stocks can now be deferred by investing in an opportunity fund that investing in properties in designated locations called opportunity zones.
Cost Segregation Expert and Investor · Lakewood, NJ · Member since 2017 · 1k+ posts · 1k+ votes
7y
@Jung Won Kim The short answer is no...but it depends.
For someone who is not a 'real estate professional' deprecation can only be used to offset income from real estate (the exception is if one's Adjusted Gross Income AGI, is less than $150,000 there is a certain amount that can be used to offset other income).
If one is a 'real estate professional' they can use the bonus depreciation created through cost segregation to offset all of their income, and if there is any depreciation left over after that, it can be used to offset capital gains.
Capital gains tax from stocks can now be deferred by investing in an opportunity fund that investing in properties in designated locations called opportunity zones.
Investor · Richmond, VA · Member since 2020 · 6 posts · 3 votes
2y
I know this post is 4 years old, but can anyone substantiate the above claim? I am having a very hard time backing it up, as much as I would like it to be true.
Investor · Smyrna, GA · Member since 2016 · 58 posts · 16 votes
2y
Helpful tip, @ the poster in the future, like this @Yonah Weiss, and he should see your question and can probably lead you to some sources that would substantiate this. However, Yonah is highly respected in his field and very knowledgeable. So unless this info has changed in 4 years, it should very well be accurate and from my understanding, it is accurate --re: to the real estate professional aspect, not necessarily the last sentence involving the opportunity fund.