Tax Strategies for High Income Professional

[Ryan Lowe]

Hi - I am a new investor starting to invest in long term rental properties. I am a high income W-2 earner based in NYC. What tax strategies do folks recommend? This will be a passive investment. 

[Basit Siddiqi]

Quote from @Account Closed:

Quote from @Basit Siddiqi:

Real estate ownership is good for high net worth individuals in general.

Cash-flow will generally not be taxed when you factor in depreciation.
If you are a high net worth individual, your tax rate is likely around 45%(35% Federal and 10% for NY/NYC)

Therefore, $1,000 of cash flow is $1,000 after tax
On the otherside, $1,000 of interest income is likely around $550 after taxes.

Best of luck

@Basit Siddiqi: What happens when money from an SDIRA or 401(k) are used to lend for a flip and that money is lost? Is it a tax write off or is it penalized?

That amount that is lost will not be taken out as a distribution in the future, so it wouldn't be considered income.
There is no loss for decrease in value in a retirement account.