When you do like-kind exchanges, if you really want to free up the PAL, you can structure a transaction to receive a boot(including cash) in the 1031 transaction. The boot is treated as passive income and you will get to deduct the losses.
On top of that.
1)First, see if you can find a way to decrease your AGI below 150 in you are on the borderline. Bunch of ways to do that. There are IRA and other designated IRA that can bring down your AGI.
2)If you make way over 150k, than I would suggest investing in a diversified property group with different outcomes (some rentals might not have a good future appreciation or in a bad area, but have a good cash flow that will absorb your other rental loss ).
3) Invest in other business as a passive investor where you can generate passive income. You should be diversifying your investments anyways if you're a high earner.
4) Look into self-charged interest ( your interest income from lending to your business) that converts your interest income ( which is normally a portfolio income) to passive income. You can then offset a passive loss.
( I know it is a complicated topic, please talk to qualified professional)
Thank you for that info, that's very helpful!
I am fortunately well above the 150k mark. The option of counting part of the 1031 transaction as passive income is a great option.
As far as diversifying, I definitely agree. Unfortunately, I don't quite meet the accredited investor qualifications yet, I will in a years time. There's some real estate investor groups here in nyc, but they all require accredited investor status. Also, many of them require 100k, which is more than I'd want to put into one fund at this point (only 27, so though I make a good income, not enough savings to have 100k in multiple ventures).
I have a comfortable amount in stock market and then a good chunk (40-60k) saved for my first real estate purchase. Hoping to BRRRR and get into 2-3 properties this year then hopefully another 3 next year and go from there.
You're advice about diversifying is definitely good though, I'll make sure to keep that in mind. And yes, as you mentioned, this is complicated and I'll be working with a CPA throughout, thank you!
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