This content was created by MARK KOHLER. This content was uploaded by MARK KOHLER. This is a YouTube video titled "Passive Losses and Rental Real Estate" (published 2017-09-12) featuring tax advisor Mark Kohler presenting a solo tax-and-legal tip. He explains why rental properties often show paper losses (depreciation, mortgage interest, travel, home office, etc.), the IRS classifications (passive, active, real estate professional), how passive loss carryforwards and the 25k active investor allowance work, and how losses are bucketed and used against future real estate gains. The video promotes his tax & legal library, other instructional videos, and calls to subscribe and follow for more content.
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Hi, Mark Kohler here with another tax and legal tip. Now I have a lot of new clients that come to me and say, hey Mark, I don't, I don't track all those write offs with my rental property. Dining, travel, entertainment and cell phones, home office. My accountant before said I make too much money so I don't get a write off. Oh, wrong answer. You'll get a write off. You all about timing. Let's talk about passive losses and rental real estate. Now let's go to the board. And keep in mind this is a huge topic. I've got several videos in my tax and legal library. It's a chapter in my book. It's well worth the investment. Check it out below. It'll save you thousands of dollars. And you may even need to give it to your accountant so they can get up to speed on it. This is a big deal. Now what we do is we divide your life into two sides. We put short term income over here and, and this is where some of you might have your operational business or you might have a W2. This could be a corp, it could be an S corp, whatever. That's not the issue. It's your long term side where we really need to do the planning. And this is where all of your rental properties are. How many LLCs, which LLCs do you use? Which state all that stuff. Topics for other videos in my tax and legal library. But let's talk about the losses that these rental properties generate. Now why do rental properties create losses? Even though they're going up in value and they're creating cash flow, they create losses on paper. And that's because of the big D. And I don't mean Dallas. I'm talking about depreciation and writing off mortgage interest and all those again, little expenses. Travel, dining, Entertainment, home office, PDAs, laptops, the kids. You want to track all of that because this is a business. A rental property is a business. And I want you to extract as many write offs as you can. What happens is those write offs, including depreciation, the big one, they generate a loss on paper even though you're building wealth and you're getting cash flow. Okay, now the IRS is going to put you into one of three categories. This is going to be the passive category or active or real estate professional. Now each one of them comes with their own bag of tricks. Now when you're a passive investor, you can only deduct these passive losses against passive gains. I don't want any of my clients over here. I want them to at least check the box active where you can deduct up to 25 grand of losses up to the point where you make 150 grand AGI. And this is where a lot of people say, well, I'm making too much money. I don't get the write offs. Oh, you'll get them. They go into a passive loss carry forward bucket. Now, if you're in the third category, the real estate professional, you can deduct all these losses every year. No bucket, no carry forward. They just come over here and you can write them off against your W2, your spouse's W2 other income if one of you qualify as the real estate professional. I've got other videos on that in my YouTube channel and big long awesome videos in my library. Check them out. But let's talk about this bucket, this bucket of losses. And this is where I want clients to build this up. Whether they're an active investor or passive investor, these losses are going to carry forward for the rest of your life. They go into this bucket. And I want us to track all these losses. And what's cool is when you sell any rental property any day in the future, you can dump this bucket out and against any other gain on any other real estate. The losses are not tracked per property, they're carried forward in one bucket. Now, if your accountants check in the right box, you should be at least active. But you're going to carry these losses forward and write them off as you sell property in the future. This is why rental property is Again, one of the most powerful strategies in building wealth is so that we can get appreciation, cash flow and passive losses. Bottom line. Hopefully I've taught you something about the power of tax planning and real estate investing. Guys, there's so much to learn in this area. Please continue to follow me and check out my information here. Coming in a moment. And continue to live your American dream and buy rental real estate. It's a huge part of your financial freedom plan. Thanks so much for watching and if you found that helpful, please look in the description below. I've got links to my tax and legal library, my QuickBooks training videos, how to start a small business 50, 60, 70 videos, some as long as 30 minutes, explaining more information on tax and legal strategies that will change your life. Also, if you'd like to subscribe to my newsletter or check out my social media links, please click here. There are weekly free tips and strategies and articles that you'll find extremely helpful and I would appreciate it if you'd subscribe to my channel. I've got so many videos here. I produce every week on my YouTube channel. And I'd love to give you a ping every time I shoot a new video. Thanks so much. And keep living the American dream.
