6 Real Estate Tax Strategies - Simplified

Live, breaking it down. And today we're talking about six real estate tax strategies for 2023 simplified. Now I've got a real estate tax summit virtual coming up in a couple weeks where for eight hours we're going through 20 different strategies. But I wanted to hit six that I think are critical for every real estate investment, Usable and important. So here's the six I'll tell you to write tell them to you right now and then we'll unpack it. Number we're going to talk about the S Corporation for real estate professionals. Those doing rehabs, fix and flips, realtors, brokers, contractors, anyone in the real estate industry, creating ordinary income as their primary occupation. Number two, we're going to talk about long term rentals and the real estate professional classification, the short term rentals, that's your Airbnb. And the loophole for the short term rentals as it may currently stand. We'll see how long continues to allow that loophole. And number three, the self rental election. When you have a rental property you rent from yourself. Those are three critical strategies that will relate to cost segregation and bonus depreciation. But they may apply in all three of those. So we're going to talk about those three long term, short term, self rental and then cost seg and bonus will be a sister to that because they apply in those three. And then we're going to hit the 1031 exchange. Still alive. Well, I've got many clients in the middle of 1031 exchanges right now. And finally the charitable, Charitable remainders, Charitable Remainder Trust, crt Still alive and well and working on one with a client. Actually two of them today. Clients. So these are the six that I think again all you real estate investors should be able to kind of rattle off the basics when you're at a dinner party talking to a friend, a partner and let's do it. So number one, the S Corporation. Why does that matter? So let's go to the whiteboard for a moment here. This helps a lot of people get this their head around this is that if I'm a sole proprietor, I'm just a brand new small business owner, or I'm an LLC, or I'm an S corp, what does the tax ramification look like? So if I'm out doing fix and flips, rehabs, whatever, realtor, broker, contractor, plumber, electrician, framer, cement, whatever, I bring in 100 grand and apples to apples. So no matter what my structure is, I still have 100 grand in sales. So here's my sales and Then I spend, let's say 25 grand on expenses. Of course these numbers are just examples here to get it on the table. And they're going to, if you're only bringing in 100 grand gross as a professional that you know, you may just be getting started. So I know there could be a cost of goods sold, you'd be in the millions and still end up with net. This is where we want to go, net of $75,000. So you're going to bring in the same amount of money, have the same expenses and have the same net. It's very, very common. And the only question is which entity did you claim it in and what's going to be the result? So the problem with the sole proprietorship and the LLC is you're going to have that self employment tax. Many of you know that I've talked about this a thousand times. Some you may be new to this concept. I'm going to discuss the trifecta here in a moment. But now I'm paying close to ten grand for fica. The F word here, ugly. And you'll say even with an LLC? Yes, even with an LLC. LLCs do not save taxes. So I'm getting burned right here big time. And then I've got state and federal, so I got state and fed. Boom ba da bang ugly. So every contractor, realtor, broker, plumber, electrician, landscaper, anybody working in professional services or product sales, small business owner, and especially in the real estate industry, when you net that 75, what we want to do and we go over to blue here is we want to split that 75 grand. We're going to take a W2 here and a K1 here. This is sometimes called a draw or a distribution, the different terms for this. But in this example, let's say I just split it in half. I take 37. 5 as payroll, 37. 5 as distribution. Now I was just teaching to this to a group of realtors, Keller Williams in Phoenix, two days ago. And of course the first hand that shot up said, well my accountant said that would be too aggressive. You've got to take a bigger W2. How can I prove that that's a reasonable compensation? And da da da da da D Let me look you in the eye, you accountants out there and enrolled agents taking off the whiteboard. I want you to hear me when I say this. For over 25 years we have been teaching this, living it, doing 1120s tax returns and payroll reports for clients in the thousands. And not once have I ever had a client audited for not taking reasonable comp. I have a matrix that puts our clients where it's aggressive but not too aggressive. And at 75 grand, I, I would split that 50, 50 all day long. I don't care where you live. Married, single, realtor, broker, contractor, plumber, doctor, engineer. And I can stand behind it. I've got partners that are prior IRS agents. I've been to every reasonable comp CE in the world. And you may think, mark, you're wrong. I'm a cpa, I'm an attorney. I've taken all the tests, all the exams. I'm licensed in multiple states. And where do I stop in trying to let you know if you think this is too aggressive, you are far too conservative. The end. So, my friends, if your accountant is being not aggressive enough with your W2 and an S corp and you're making more than 50 grand a year net, you got to get a new accountant, you got to upgrade or bring them along for the ride. Now that, my friends, is strategy number one. Now I could. I've got videos that talk about this for hours in our workshop. We're going to pack this more on. That's on May 25th. Later this month, the link will be down below for the Real Estate Virtual Tax Summit. You can pipe in from anywhere and it's going to be recorded as well. Very affordable. But you have got to know this strategy and we want to break it down. So let's go back to the whiteboard and bring us around to strategy number two. Because what we want to do is build our trifecta. And as we build our trifecta, we're going to put our operations income over here and then we're going to put our passive income over here. And this unlocks our next three strategies. So I've got my LL and it could be an LLC taxed as an S corp, by the way. So I could have a here's my S corp and it could be, like I said, an LLC taxed as an S corp. As an S corp, an LLC not taxed as an S corp is not a good strategy. So our trust, revocable living trust, is going to own the our entity and we're going to be off to the races over here. We're going to buy rental properties and there's three rental properties we might buy in this cute little llc. Now I could get into legal strategies on how many LLC and where to set up the LLC and asset protection. That's not the story today, but we've got our LTR Long term rental and we would talk about real estate professional. Okay. The second option is short term rental. That's an Airbnb type strategy with the loophole and we're going to get into material participation. And then the third rental property is going to be a self rental and the Dash 4 election. So it's another strategy to get you tax savings. This rental you're renting back to your S Corp. So it's a self rental back to your operational company. Operational company and you're going to rent your own building back. The short term rental and the long term rental, these are rentals to third parties. Now these three strategies, I'll put it in red here. 1, 2, 3. Those three strategies are where you start talking about cost seg, which is ramping up the depreciation. So I get more depreciation in a given year plus the bonus depreciation strategy which is at 80% this year. And we're going to try to take as much depreciation as we can and it even brings into the play the 179. So we've got these three. This is a great way to generate more losses on paper even, and it doesn't cost you dollars. So this is beautiful. So the number one strategy was the S Corp. And then we've got these three. I should probably call these two, three and four. Those are. That brings us around. So if we go to the long term rental, let's zoom in on the long term rental for a moment. And by the way, I'm going to be taking questions here, so type them down below. Ignore any little posts that it's me trying to get you to invest in Bitcoin. That's a bot. It's a scam. Don't look at any posts from anybody that are talking about making money or getting you to respond. You guys just put in your questions and I'm going to answer them here in a bit. Okay, so the long term rental strategy, which we love and we've been around forever, is this LLC is going to own a long term rental property and it's going to generally generate a loss because we're going to write off depreciation and mortgage interest. But this loss is going to either come over here and be active or a real estate professional. And an active can only take 25 grand of that loss and it phases out. The real estate professional gets to take 100% of the loss. If you don't qualify under active or real estate professional to eat up that write off and you might have multiple rentals out here. You're going to do a special grouping election which is called the Dash 9 election. And this loss will go into a carry forward bucket if you don't qualify for the election. And real estate professional. So what the real estate professional is again, I'm trying to simplify. This is your primary occupation has to be real estate. You got to be putting in 750 hours in your primary occupation. And then number three, you have seven tests to show you have material participation participation in this group that you're going to select. And there's seven tests to get there. Again, this is an hour conversation at our workshop. This is stuff you can read on, you can Google the heck out of it and have you have a quick question, we'll try and answer it. The long term rental strategy is one that the rich have used forever. Very, very powerful. And as you qualify or your spouse as a real estate professional and show that material participation, it unlocks all of those losses. Pretty cool. Now let's go to our next strategy which was the short term rental. So we're back to our trifecta. I've got my ops over here, that's fine. I have my LLC here and then bam, I go buy a short term rental. Now what's interesting about short term rentals, they do not generate losses, they generate gains. And the reason why they generate gains is you're oftentimes getting 3x what you'd get in a long term rental. You're making in short term rentals under seven days. So you're getting increased revenue because of the short term rental, more risk. You got all sorts of issues with the short term rental. You got to get your, you know, furnished and all those goodies get with Airbnb, line things up. It's a different type of rental. But in the first year that you're a short term rental and this is the best time to do it is in the first year if you can show material participation. And I like in this, in the material participation tests, number three of the seven is the one I love. So you only have to participate under one of the seven. But number three is the money section for this which means you put in 100 hours and more than everyone else. And so you buy your short term rental, you furnish it, you do a little repair, maintenance, put in your time, make it pretty, you can take a, do a cost sag, take all that depreciation and the, in the year that you're materially participate, bam, you can take all of that loss in that first year because you're going to have gains in the future, we know that. But in the first year, if you ramp up the depreciation, this loss is going to come over here and you can use it against your K1 or W2 or day job or anything. And you don't have to be a real estate professional, that's the loophole. But you have to show material participation as to qualify as a short term rental. And we want to be careful about substantive services. Again, another topic that I've done slideshows on and we're going to cover it in our workshop and it's, it's a big topic we're going to spend at least 45 minutes to an hour on at our workshop. But this short term rental strategy is incredible. And that my friends, is number three of the six. Now number four that I talked about is if you have an LLC and you buy a building and rent it back to yourself and your operations, very common. This is the dentist with the dental building, this is a contractor with the shop, the hair salon owns the building, whatever. So you've got your operations over here and the building over here. In a storage unit scenario, this might be storage units and this is the building running the U haul office and running, selling boxes and locks and all that. So when you have a self rental, here's the cool part, you can make a special election and it's called a Dash 4 election under 469, this Dash 4 election is where you want to be. It allows the rental to be included in this overall operation. So you're able to put it all under one umbrella. And by doing so, if I ramp up, if I have losses here and I ramp it up again with some cost seg and some bonus and some depreciation and I go after this in the first year, this loss, if I make the special election and I have to meet certain rules that I own the same percentage here and the same percentage here, all these losses are unlocked and I can write them off against my other income, K1s, W2s, anything. And I don't have to be a real estate professional. But it's a self rental, not to a third party. So the self rental is exciting and very available to people that are not real estate professionals. We've got the short term rental and the long term rental where the real estate professional classification matters. Now finally, our last two strategies is the 1031 which you here at the taxpayer want to sell a property and go get a new one and the property you want over Here, you want to exchange and get that property and have them sell it to you. The problem is they don't want your property. Now, a 1031 basically says this. If I exchange it with another person or. And I sell my property and buy a new one of equal or greater value, not the amount you netted, not the amount of the loan, the sales price. Sales price of equal or greater value with the new property, then there's no tax, no tax, and I get to move this property off the books and I get a new property. The problem is if you're. The seller doesn't want your property and you want. But you want theirs. And that's what happens 100% of the time. We use a qualified intermediary in the middle. And so what happens is you're going to go find a buyer for your property, and the buyer's like, hey, I'll give you money. And you're like, okay, cool, I'll give you the property. And so they end up with your old property here. And then you go over here and you go, oh, hey, seller, I want your property. And they're like, oh, okay, that sounds great. Here's the new property that you want. It looks like a meth lab. Okay? So then this money goes over here to the seller, and then the new property comes over here. And so if we buy a new property of equal or greater value, that's a 1031 exchange. Now, what's cool about this? You can sell 10, buy one, you could sell one and buy 10. Now, there's identification periods. And how many am I going to identify and close on? And is it 3? Is it 1? Is it a construction 1031? Is it a development 1031? Is it a reverse 1031? Oh, my gosh, Big topic. Another big one. But the basic principle, simplified, is I'm going to sell a property and buy another one, or sell one and buy three. Or sell three and buy one. But the sales price is what I'm looking for. And you're going to kick all that money and kick that can down the road with no tax. You want to know the basics? We're going to be covering it at our summit as well. Now, the last one is the crt, the Charitable Remainder Trust. Oof. These are sexy. Instead of paying tax on the sale of your property, and you're like, I don't want to buy another property. I don't want to do a 1031. But I got this property I bought for 400 grand, and now it's worth 1.5 or whatever. And I'm going to have a big tax bill. I'm going to quickly go through this, but just simplified. You're not going to sell the property. You're going to create a trust, the crt. In fact, we'll do it this way. I'm going to create this CRT in the middle. That's step one. And I'm going to transfer my property into the crt. I'm not going to sell it, I'm going to transfer it. That's number two, transfer it into the crt. And this charity is going to sell the property. And so when your charity sells a property, there is no tax. And so that million dollars that was going to get a haircut with taxes, now all that money goes down back into the CRT with no tax and you've got a bigger nut to invest. And so step, step three is you sell. Step four, we're going to go take this and create a unit trust payment. We like the credit, so we're going to call this a credit. And this credit is going to pay out anywhere from 5 to 12% based on your age, a payment for the rest of your life. You're going to get this payment for the rest of your life. Meanwhile, step five, you continue to invest the money and, and that's okay, you can make the call the shots. So you continue to invest, you get this payment and then upon your death, and it continues for the rest of your life. And there's other ways you can do it, 20 years, whatever. But if I kick this out upon death, it goes to a charity. And since the charity is going to get this at the end of the play, which I'm going to say is number seven. Where's number six? Oh, number six is you get a tax write off. What? I don't pay taxes and I actually get a tax write off? Yeah, because you're giving to charity in the future. And so we come back and look at what's the present value of that gift. And that's what the tax write off is today. So you can transfer your property, pay zero tax, get a payment for the rest of your life, continue to invest the money and upon your passing get it goes to charity. And all because of this, you get a tax write off that's a based on the fair market value, the present value of the fair market value of what you're putting in right now. So it's just incredible. Well, that, my friends, are the six strategies that I was so excited to talk about and to Have a little drink of my rock star. So good. And so Patrick, in the studio in Idaho, we got Tristan in the studio here in Arizona answering questions of clients all around the world. Grateful you're here. Love real estate. Keep the dream alive, people. Keep looking at real estate. It's the best asset in the world. I love it. So, questions? Patrick, what do we got?

This is from Susan M. What happens when you hold your property long term and surpass the depreciation 26 year term? Are there any tax deductions?

Okay, and I'm going to. My earpiece was kind of out of there. What happens if I hold the property long term? And then what happens, what happens if

it surpasses the depreciation 26 year term? Are there any tax deductions?

Great comment. No, you're. See, here's the thing. If you go out and buy a rental property, that's whiteboard it and I go buy this property for, I'm going to put fair market value, purchase price, 400 grand. And you go out and buy this and then you're like, and over 25 plus years you keep this property. And what's going to happen? You're going to pay it off so there's no longer an interest deduction and you're going to turn around and depreciate the hell out of this. Right. And so at some point the depreciation's gone too. So the interest deduction's gone, the depreciation deduction's gone. Now, Dave Ramsey may love this, that you've just got this paid for property with all the depreciation's gone, it's paid off, the mortgage is paid off, and you're just getting cash flow from this. Oh, that's great. Frankly, on paper it's a terrible situation because this property now could be worth 800 grand. And the cash flow from this is an ROI based on 800 grand. So if, if I'm getting, boy, $40,000 a year in rent, you may go, oh my gosh, that's great. I'm making 40 grand a year in rent and I don't have interest. And, but I don't have any extra write offs. Got depreciation's gone, maybe property taxes and a few minor things. You take that 40 grand and divide it by the 800. I'm only making 5% on my money. That's stupid. It's not good. You're a rent collector, you're not an investor. And so good long term. Now, some of you that are paid off, your rentals you're like, mark, when I'm 25 years from now, I just want to collect rent. I don't care. That's fine. Teach their own. But for some of you that are in your 30s, 40s, 50s, or even 60s, you're, you're like, holy crap. When this property goes up three years from now, I'm going to refi and I'm going to go buy two more properties. And then in three more years, I'm going to buy two more and I'm going to start building my wealth and using debt. And it's okay because the debt is making me money. And I'm not putting, you know, zero down and getting too aggressive with debt. But I can find a happy balance and a good medium where these properties cash flow and I'm getting new depreciation on a regular basis. I'm buying additional properties and I'm also paying down the debt. I'm getting a better ROI on my cash. But it's true, at some point you're gonna say, Mark, I'm 70 years old, I'm done buying new property. I just want to sit back and collect rent. God bless you, that's wonderful. But you're gonna pay taxes on that money and that's okay. You built this retirement that's now supplementing Your Roth, your 401k, your Social Security. So down the road, the write offs are terrible. But you've created this cash flow machine and that's what we're trying to do. Okay, next question.

All right, this is from Jesse Fowler. Can I buy and flip and self finance the sale in an ira?

Can I buy, sell and flip a property in my ira? Okay, let's go to the whiteboard. Now. This is not a self rental. He didn't say a self rental, did he?

No, it says buy and flip.

Okay, so everybody, we actually recorded a podcast on this last week. I would recommend all of you get to the directed IRA podcast. We did a podcast last week on how to flip properties in your Roth or Ira or 401k. That was almost a 45 minute show. So get over to the Directed Ira podcast. Please subscribe. Give us five stars if you're enjoying our conversation there. So that's very common. We're constantly talking about it. Yes, you can freaking do it. So when it comes to your IRA, your Roth or your IRA or your 401k, they can do two different things. You might have a retirement account that starts an LLC and it buys a long term rental. You might have one of your retirement Accounts open an LLC and it does a fix and flip and you might have a retirement account that opens up an LLC and does a short term rental. Your retirement account can go out and get debt. It can partner with others. It's all okay. Can you believe that? And we've been teaching it for over 20 years. Self directing is alive and well. Get to the directed ira.com website. Directed ira.com I think there's a live webinar today. Or is it tomorrow? Is it today? We're doing. We're doing a live webinar next week. It's next week. Okay, so directed Ira.com has a live webinar every week. We have our podcast. And@directed ira.com you can set up your own retirement account. You guys will freaking love it. It's good stuff. All right, Patrick, next question.

Okay. If you take. I'm sorry, Mark. Does your firm segregate cost between different asset classes for clients who do not want to pay for a cost segregation? If so, what is a generic allocation? Great work from Avery Beasley.

Well, Avery is trying to get around the cost seg services that are out there and they can be expensive. We're going to. And Avery, I'm just going to beg of you, please sign up for the real Estate tax summit on May 25. We are going to have a whole section on cost segregation. I've taught classes on it and it's a hard answer to just quickly do here and you'll see the slides when you attend. I think it's like 2 or 300 bucks for the day. Now the answer is yes. There are simplified methods that you can use yourself to figure out what the cost seg allocation is. You don't have to go out and pay exorbitant fees for a cost seg analysis. You have to be careful because it's on you if you do it wrong. And the IRS audits can be aggressive in this area because you're ramping up your depreciation. Also, keep in mind, and I'm going to cover this at our summit is if you're doing a cost seg and getting a bunch of depreciation, you better be able to write it off. Avery, are you a real estate professional? Are you using the short term loophole or is this a self rental? Which one is it? And if you go, well, I'm not a real estate professional. It's not short term, it's not a self rental. Then don't do a cost sag. Don't even worry about it, people. You got to make sure that the cost seg is making sense or it's not worth it. But yes, you can avoid using an expensive company to do a cost. Now if you're in a commercial property multi unit, you're going to use a cost seg company. But for these little single family homes, there's ways to do it yourself. Next question.

This is from Kelly Nygwin. Hi Mark. I owned an S Corp as a flipper and also bought distressed properties, fix it up and rent it. Can I do cost segregation and bonus depreciation to help offset my tax liability from my flip?

Hell yeah. Now, I don't know all the facts of your situation, but when you've got an S corp and you're in the business of flipping and you're a real estate professional and that's one of the 11 exemptions or categories as a real estate professional qualification, you're putting in the time. Kelly, you, you qualify for a real estate professional. Now you're buying distressed properties and fixing them up a little bit and running them. Sounds like you got material participation there. We're going to do a special election and group all those and yes, cost seg and bonus is going to flow through like a river girl. You're going to love it. It's going to all end up against your S corp and flips. Powerful strategy. And this is not supposed to be an infomercial, but I want you guys to have answers here. If, if set up a call with one of my tax lawyers at KQS Lawyers. They can do a tax analysis, build your trifecta, answer your questions, look at your tax return, set up a new entity for you, get your estate plan done. All part of it you and they're very, very affordable. And we're helping clients all over the country in every state. Get to kkoslawyers.com down below. There's a link. I also have a network of CPAs and enrolled agents I've been training around the country and our Main Street Tax Pro program. And if you get to markjkohler.com, you can get over to the network and find an accountant that speaks our language. We're all on the same page. We're all in the same tribe. My tax lawyers and certified tax pros. And you can interview and find the right CPA for you to prep your tax return. So please check out both of those sources and get some advice so that if you're asking this question, the answer is yes. You better make sure your accountant understands how and the lawyers can Help do that for you too. Next question.

Okay, this is from Bradley Brown. Are there tax implications for putting a rental property in an LLC after you already did a cost seg on it?

No, there's no problem. Some people freak out and they're like, well I bought it and I guaranteed the loan so I can't transfer it to the LLC because I'm worried about the due on sale clause and there's tax. No, don't worry about the due on sale clause. Don't worry if you already did a cost seg. If you're transferred it into an LLC that is a carryover basis non taxable event people. LLCs do not save taxes. LLCs are for protection and banks do not care. In 25 years I've never had a client have to pay under the due on sale clause because banks are like you're still paying your mortgage. Thanks, bye. They don't care, they've already sold your mortgage. So people, get the asset protection in place, get your LLC set up, call the law firm, get it done right. Don't try to click on a website or work with a non lawyer company because they sound sexy and will do unlimited entities for you. Do it right, get it set up and it's a non taxable event. You could add a cost seg yesterday and put it in an LLC tomorrow. Doesn't matter. Next question. Patrick.

Okay, this is from Ryan Lee. Would you recommend doing accelerated or straight line depreciation?

Well, accelerated depreciation is the concept of a cost segregation. Accelerated depreciation is a big term and you have to know everybody accountants, you know my pain. There's all sorts of depreciation schedules, double declining balance and half year method and da da da da da and but when it comes to single family home rentals, you're doing straight line 27 and a half years. That's just the way you do it. Unless you're going to accelerate. So the answer is should I accelerate? Well maybe I don't know your situation because if you don't get the write off you as a real estate professional, as a short term loophole or a self rental exemption, then that acceleration does you no good. Don't do acceleration unless it's going to have a bottom line effect on your tax return. So can you? Yes, should you maybe don't know the big difference between can and should. A couple more questions. What do you got Patrick?

All right, this is from Bradley Brown. Does time spent managing a property you are harvesting trees from count for hours towards your real estate professional status.

It. The answer would generally be no. The 11 categories of doing or being in the real estate profession does include development or redevelopment, but not harvesting trees. That's, that's a different, that doesn't fall in the line of a real estate professional. Now if you're generally. Now you can talk with your accountant and see if you can find a case that works for you. But just harvesting logs or trees on your property and unless it's part of a redevelopment, we're harvesting trees so we can level the ground and put in some tiny homes or RV lot or something like that, then we're good that time counts. But if you're like no, I'm just going back and harvesting some trees, planting some new ones, come back three years later to harvest some more trees, plant some new ones. That's not going to fall into the real estate professional classification. Sorry about that.

All right, this next question is from Shantae Edwards. It says my wife owns two and a half single family home properties and personally rent the property. She owns half with her business partner. Does it make sense for her to create an LLC for her properties?

Yes, yes. And all day and twice on Sunday. Yes. Let's go to live board people. If you've got rental property and I don't mean to sound condescending or like the answer is. It's not even a question. It's the absolute answer is yes. And I don't care if you're in California. Oh, Mark is $800 for an LLC in California. Yeah. If you hired an attorney In California, it's $800 a frickin hour just to breathe. So one little problem with that property and you're in a lawsuit with no protection. Are you kidding me? Pay for the damn LLC. So an LLC if you, if you're. You said your wife has two and a half so that means she has two properties that she owns. Probably 100%. Set up an LLC for that. It's going to be owned 100% by your Revocable living trust. You're off to the races. Then she owns 50% of a property with a partner. Well that's going to be a. Definitely need an LLC for that because I've got a partner in the mix and I don't want vicarious liability for my partner's actions. Getting over in a fight with the tenant or creating liability. Driving around the exposure on a two member property owned without an LLC is off the chart. So get the LLC set up in the state where the properties are located. If this property is in Arizona and this property is in New Jersey. I might set up an LLC in Arizona and then register foreign in New Jersey. So it's still one llc, but I'm trying to be efficient. I might put three properties in one llc but I got to start looking at the equity and the risk. Not every property needs its own llc but you have a partner. Oh my gosh. Once you have a partner that needs its own LLC because you don't want to put the property that's with a partner in an LLC own 100% of it doesn't functionally work. So your wife should have two LLCs. That's how it works. And yes, absolutely. All day long. One more question Patrick.

Yes. This is from Justin Kim. If I rent back to myself via a long term rental that was put into an S corp am I able to aggregate income expense other side on other side hustles, eBay, business, etc. Love your stuff Mark. Thank you.

Thank you. Here's the concern from that question. If you notice what they said they had a long term rental and then they want to rent it back to themselves. I'm loving it. That's great. And they said they had an S corp and they're doing online sales. And by the way, thank you for your kind compliments, online sales, marketing services, whatever. I do not care. You've got all these different businesses generating money and you're going to rent this building back to your S corp. Yes. You are allowed to aggregate both under the Dash 4 election and you're going to aggregate it all into one and you're going to get the losses from this rental against any other income. 100% love it. Here's the one thing you said in your statement that freaks me out. That property better not be owned by the S Corp. I want this property owned by an llc owned by your trust. That's a tax neutral process that gives you better asset protection. Because I don't want this rental to be over here subject to lawsuits in the operations of the business. We do not want rentals and S corps. Never. If your accountant is putting rentals in an S corp, that's malpractice. You should really sue them to get it out of there. Because what happens is you have big built in gains tax when you put real estate in an S corp. We don't want that. So the self rental is over here and then you're going to rent it back to yourself and that's a wonderful strategy all day long. Wonderful. And you're going to aggregate under the dash for election. Now, in summary, everybody, please, if this is interesting to you at all and you're starting to realize, maybe I could study up on this tax stuff a little bit. It will make you money. It will save you money. People, the number one cost in your life is taxes. Over the life of your business and your personal experience here in America, taxes are going to be your number one cost. Let's deal with it. Let's talk about it. So down below, you're going to see a link for the Real Estate Tax Summit. It's our second or third summit, full day, May 25th. Please come. You're going to you get this recorded. You can dip in and dip out of the topics you love. It's going to be a phenomenal event. Lots of speakers, lots of good stuff that's going to help you a ton in trying to build your wealth in real estate. Everybody, thanks for watching. Thanks for being a part of this. I'm grateful to be a part of your lives. Get to the our law firm site. Look, get consult with a tax lawyer. Get over to MarkJ Kohler.com find an accountant in our network. And I'm not going anywhere. I'm going to keep plugging along with you every week and trying to build my real estate portfolio at the same time. Thanks.