Are you curious how real estate investors do not pay taxes?
One of the major taxes in any asset class is Capital Gains.
In this video, I share some strategic strategies you can follow to mitigate tax liability, while growing your portfolio!
Capital gains go hand in hand with what I was just explaining with with the 1031 exchange where you take that profit from a property and roll it into the next deal where you have to bring an intermediary into the process where they’re handling all the funds you have to locate the next property within 45 days and the funds have to be rolled over within 180 days right.
And that that money cannot touch your account if not it’s a taxable event but with the capital gains tax what we can do to plan is cash out refinances right and what I mean by that is first and foremost interest rates are at a record low and yeah they may go up and we’ve seen a slight increase in interest rates but you need to leverage your assets again interest rates are a historic low we may never see rates this low again ever in our lifetime right.
So you need to go and borrow good debt against your cash flowing assets right and when you go get debt whether it’s a two percent interest rate or a 10 interest rate it’s debt and debt is not taxed so if you own multiple properties like me guess what I’m doing right now is I’m buying properties in opportunity zones tax abated properties but I’m also leveraging all the equity that I have in my portfolio calling up commercial banks and saying hey let’s tap into this equity.
Let’s cash out refinance or let’s try to get a home equity line of credit and leverage that equity and then when that money comes into my bank account there’s an interest rate attached to it right because it’s a new loan but that is profit that i can roll into the next deal right I’m not paying tax when I refinance because there’s an interest rate attached to it and that is how you can avoid paying capital gains