Low taxation is a wealth multiplier.Why real estate?

Hey everyone —I’m a tax manager at an LA-based accounting firm, specializing in real estate and high-net-worth taxation.

From a tax-efficiency standpoint, it’s worth holding REITs in a retirement account if possible, since that avoids taxation on the dividends each year.Overall, your logic is sound, you’re moving from active to passive without giving up quality or discipline, just shifting the tax treatment.

If the property becomes a legal duplex or triplex, your depreciation basis and deductions increase, but you’ll face partial recapture tax at sale and can only claim the home sale exclusion on the part you live in.Overall the property offers solid long-term tax potential but requires careful planning and accounting.

You’d lose 1031 flexibility, invite double taxation risk, and make it harder to pass properties to heirs.The Big PictureWealthy investors don’t just make money — they keep it.And one of their biggest tools for active income is the S-Corp election.- Flipping?

From the start, choose the right structure such as an LLC to protect yourself legally and take advantage of pass-through taxation, which lets you deduct business losses and expenses directly on your personal return.

If you don't like how the local taxation impacts your cash flow you can increase your rental rates but if your rental rates are too high, you will lose prospects to other landlords. 

(I bought at the ‘right” time but sold WAY too early and left a LOT of profit on the table).Since “REITs” are actually a form of a C corp that doesn’t pay tax at the corporate level, and must have 75% of its assets invested in real estate, and since the interpretation of real estate has expanded significantly over the years, REITs cover a wide variety of properties, business strategies, methodologies, and management motivations.The short answer to your question is that theoretically, the higher the growth in FFO per share the REIT is able to generate from Organic growth, and not for example because they’re able to refinance their debt at a lower rate, the higher the multiple of FFO they command, and usually the closer to or amount over NAV they sell for.Although I utilize the advice of two analytical firms both specializing in REITs, I ultimately make my own decisions as to what to invest in me how much.  

It’s interesting that Airbnb and VRBO disrupted the hotel/motel STR industry (especially before they were forced to conform with hotel like rules/taxation, and now that they’re intrenched they’re in need of disruption!    

Fortunately, tax treaties and foreign tax credits can often prevent double taxation.