How to Structure Seller Financing (Get a 5% Interest Rate!) (Rookie Reply)
Summary
This article discusses the "one big beautiful bill" and its tax implications for real estate investors, particularly rookie investors. Hosts can now potentially benefit from increased depreciation deductions, especially those using house hacking. Additionally, the QBI deduction has been extended which can significantly reduce taxes for those with active businesses or profitable rental portfolios.
Key Insights
- •The qualified business income (QBI) deduction allows individuals with active businesses to deduct 20% of their business income, which has been continued in this bill.
- •The "one big beautiful bill" allows for a significant increase in bonus depreciation, potentially writing off more than double the prior amount. For instance, a property might allow for $30,000 of depreciation instead of $15,000 in the first year.
Action Items
- ✓Review your tax returns to see if you are taking advantage of the qualified business income (QBI) deduction. It is on the first page of the 1040 form.Effort: lowImpact: medium
Tools & Resources
- →Cost segregation firm: Hire a firm that does cost segregation, and so you provide them with your property information to break out the building into different components like specialty plumbing, specialty electricals, and with those numbers, then your CPA could follow your tax return using faster depreciation because the IRS has a set of law that says certain things, we can write them off or depreciate faster than other items.
Common Mistakes
- ⚠The article suggests that many people are missing the QBI deduction. It is important to review tax returns with your CPA.
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