Tax Help! / Smart Ways to Invest Money

15 Replies

Hey everyone,

I'm a 30 year old real estate agent who owns a team in the DC area. I'm looking for some tax advice.

I'm making over $500k / year in my business and living well below my means. I'm looking to invest most of my money and to take advantage of tax opportunities. Most agents in my brokerage don't invest much in real estate which is crazy to me - and the ones that do don't seem to have any information on commercial real estate / accelerated depreciation / smart ways to invest their money. 

I'm wondering if anyone has any advice (books to read / investors or an accountant to talk to / etc.). 

I would also love to learn more about commercial real estate in general -- are there any local meet-ups happening in the area?

Any information you can share would be much appreciated!

@Lukas Iraola

I took a quick class that cost a few hundred dollars to help open my eyes about tax benefits. If you're making that much and don't know about all of the tax breaks you can get, you would probably easily make up for any time and money you spend on talking to a good accountant on how you can move forward easily.

Oddly enough, the accountant I used is actually Daniel with my online accountant.

@Lukas Iraola the two books I see recommended most are "Tax-Free Wealth," by Tom Wheelwright, and "Advanced Tax Strategies," by Amanda Han and Matthew MacFarland. It should at the very least give you a good start.

Hi @Lukas Iraola , I would also highly recommend "The Book on Tax Strategies" by Matthew MacFarland. Depending on your familiarity with Real Estate taxation, he has an intro book as well as an advanced book. Both are very informative. If you ever need to speak with a CPA or want to learn more about commercial real estate, feel free to reach out. I'm more than happy to help! - Julio

Originally posted by @Lukas Iraola :

Hey everyone,

I'm a 30 year old real estate agent who owns a team in the DC area. I'm looking for some tax advice.

I'm making over $500k / year in my business and living well below my means. I'm looking to invest most of my money and to take advantage of tax opportunities. Most agents in my brokerage don't invest much in real estate which is crazy to me - and the ones that do don't seem to have any information on commercial real estate / accelerated depreciation / smart ways to invest their money. 

I'm wondering if anyone has any advice (books to read / investors or an accountant to talk to / etc.). 

I would also love to learn more about commercial real estate in general -- are there any local meet-ups happening in the area?

Any information you can share would be much appreciated!

Congrats on being so successful at 30! Great place to be. Are you looking into multi-family residential commercial property? Or non-residential commercial? Or 2-4 units? Or just cash flow?

Here's the main thing: You can cash flow while deducting depreciation and having losses or very minimal gains. CPA will be helpful!

 

@Lukas Iraola - there's quite a few CPAs on here that would be willing to help you out and discuss entity structure/investing plans/tax opportunities. I think it'd be well worth the money (as well as tax deductible) to have a consult for your business. One possibility to sock some extra $ away would be to start a solo 401(k). You can contribute up to $58k for 2021 (there are limiting factors here), so you'd want to talk to a CPA about potentially getting this set up and determining your eligibility. 

@Lukas Iraola , congratulations on such strong start to your career!

To anyone who has a successful career going, I normally recommend they start investing passively in syndications.  That doesn't take much time and allows you to start building equity and cash flow while you are reading books and learning more about the different aspects of commercial real estate. 

And start as soon as possible.  Later in your life, if you delayed investing even only for a year or two, you'll wish you had started earlier, since your net worth growing by 10% annually 20-30 years from now is a LOT bigger number than today.

As far as tax advice, be sure that the CPA and tax attorney that you work with are commercial real estate investors themselves. I've used and seen CPAs who are strictly tax preparers and not tax strategists and who aren't familiar with CRE tax advantages. And attorneys who can handle the CRE transaction, but aren't versed well in Asset Protection and liability issues.

The books others have recommended here are very good resources.

Taxes are the largest expense for most people and becoming tax literate (not an expert), can pay off many, many times more than the cost of professionals.

If you want to talk further, contact me and I'll be glad to give you more specifics.

Hey Lukas- I am not sure if someone has already mentioned this book but Tax Free Wealth By Tom Wheelwright is a great book. He also has a podcast you should check out! 

@Lukas Iraola

The fact that you are a real estate agent, it would be a great strategy(if you qualify) if you were able to claim real estate professional status and offset the rental losses with your active income.

and Yes! it is crazy to hear that you work with a team of agents and they don't invest in real estate.

Consult with a tax advisor to learn more.

Below are some tips to find a Local CPA that specializes in real estate
1) Attend a Local REIA / Real Estate meetup and see who other investors are using as a CPA
2) Network with other investors from your City/State that you find on bigger pockets and see who they use as a CPA
3) Look for CPA's with good google/yelp reviews where 'real estate' is mentioned in the review.