What are the tax benefits available for an OOS investor?

[Ali Mirabzadeh]

Hello BP Community,

I'm Ali from California. I'm planning on purchasing my first duplex in KC in early 2023. I have started planning/researching on how I can get tax benefits and/or save more money once I purchase my first property and start getting rental income and buy more properties down the road in a couple years.

I have been reading online and BP posts but a bit lost. I'd like to know in what ways I could benefit from tax advantages as an investor in California owning propert(ies) out of state. 

I'd like to suit myself for success and would like to learn more about the tax benefits available for me. 

Also, I'd appreciate if you can share your thoughts, network(CPA and tax attorneys), books/article that can help me learn more about it.

I'm single and in the high income tax bracket so would like to save more money on my rental income, later selling the properties, and take advantage of tax deduction available to me.  

Happy Investing!

[David M.]

@Ali Mirabzadeh

Poke around BP..  This topic has been come up recently a few times...

Doesn't matter if you are OOS...  Since you are a high income earner (I assume AGI >$150k), you won't be able to reduce your main tax liability.  This is common misconception that being a landlord create deductions that decrease your overall tax liability.

Passive real estate investing allows you to deduction expenses such as taxes, (mortgage) interest, insurance, repair expenses, etc. so that you don't have or have very little net income from the rent.  don't forget depreciation as the main if not only non-cash deduction as well.  The whole point is to use the power of leverage to that you sit there not having to pay a dime of tax or even a dime on the house while the rent is covering everything for you.  The mortgage is being paid down by the rent so you are building equity and over time your property should be appreciating.

If could be easier to chat than "typing a lecture."  I'd be happyt o chat, just send me a message.

[Bruce Lynn]

@Ali Mirabzadeh   This is probably a pretty good guide.

https://www.biggerpockets.com/...

[Aj Parikh]

Quote from @Bruce Lynn:

@Ali Mirabzadeh   This is probably a pretty good guide.

https://www.biggerpockets.com/...

 Thanks for sharing this article. Really great read