This content was created by Joe Homs 949-625-4533. This content was uploaded by Joe Homs 949-625-4533. YouTube video titled "How To Defer Real Estate Taxes" (created 2023-01-19) featuring Joe Homs 949-625-4533 presenting guidance for real estate investors on two year-end capital gains tax deferral strategies: 1) 1031 exchange (identify replacement property within 45 days and close within ~6 months to defer gains) and 2) installment sale / seller financing (seller acts as lender and recognizes gain as payments/interest are received). He advises working with experienced tax professionals, references his 40+ years of experience, and prompts viewers to subscribe, watch a related video about LLCs, and book one-on-one time for real estate questions.
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In today's video, we're going to talk about how to defer real estate taxes. Coming up next. If you sell real estate investments at a profit and generate capital gains, here are 2 tax deferral strategies to use at year-end. Because these tax vehicles can get quite complex, you'll need experienced tax experts to To make it a seamless process. Are you looking to live the life you've always wanted through real estate? That's exactly why I made this channel, for the new and experienced investors. Make sure that you subscribe, hit that like button, and definitely share this with your friends. So tax-deferred strategy number 1 is 1031 exchange. And 1031 is in the IRS code, and it basically says that if you sell a property, let's say for $500,000, You're able to buy another property, $500,000 or more, and you have to do it in a certain period of time because— so there are some rules in doing an exchange. So you need to identify the property within 45 days, and then you need to close that property in 6 months or less. The hard part is identifying that next property within that 45-day period. So once you have your property on the market and then it goes into escrow, you should run out there and start looking for that upleg property. So if you take all the profit that you're going to make from the sale of this $500,000 and you take it and you put it over to the next property, then you do not have to pay any capital gains on that exchange. Strategy number 2, installment sale, seller financing. This, this is a type of creative financing That a seller can use to attract a buyer to come in and buy a property where the seller is actually going to become the bank and give a loan to that buyer. So all that money that's given in a loan that year, the only thing that's taxable is any interest that comes in during that year. And make sure you check with your CPA or tax advisor on all this. But I've been doing this for over 40 years. So if you do an installment sale, seller financing, and let's say you take back a loan on the property for $300,000, you're going to pay capital gains on that money that you received that year. So maybe there's another couple hundred thousand coming into your pocket. You're definitely going to pay capital gains on that. But the other $300,000 you're going to pay over a period of time. As you receive that money in interest payments. Once it comes to the due date, whether it's 3, 5, or even 30 years down the road, then you're going to have to pay taxes on everything that you get that year. Investors should always review their capital gains taxes and depreciation recapture with their tax advisor prior to selling any real estate. Make sure that you always talk to a tax professional. If you want to know if you need an LLC to invest in real estate, click on this video right here. The answer may surprise you. If you have any real estate related questions, please feel free to book some time on me one-on-one. As always, I'm always here to help.
