Coach G explains practical tax strategies for real-estate investors: using IRC Section 121 to exclude gain on a primary residence after two years (he cites $250,000 for singles, $500,000 for married couples), using IRC Section 1031 like-kind exchanges to defer tax on property trades, and using self-directed IRAs (including Roth and traditional) to hold investment deals. He gives a personal example of building wealth by holding rental houses and deferring or minimizing tax.
Living a tax life, you don't need to master the entire tax code, but you should master a couple sections. Section 121, what that says is that your house, if you live there for two years, you can basically shelter the gain of a quarter million dollars as a single person or half a million as a married person. That's a great angle. 1031 is an exchange. You don't have to pay the money on the taxes. When you buy something and sell something, the passive investor, be careful with that one. Do it the right way, but you can. I had a job for many, many years where let's say I made $100,000 and I did, and all my peers did also. But I owned 20 houses as rentals loans, long term hold and pay not much taxes. They paid a lot of taxes. So with that extra money, guess what I did. I bought more houses and I built a fortune that way. So you don't need to be a tax expert, but figure out like those three sections that really fit the investor. I'm looking at current right now. The ira. We should all have a self directed ira, a Roth, a regular one. These deals, I think Reggie was here when last month talking about doing deals in your ira. There's no reason not to. So those are tax issues.
