ON-DEMAND INSIGHTS
Welcome to Insights, an IMG video series that dives into topics relevant to multifamily real estate to help you make more informed investment decisions.*
Depreciation and its tax implications are a crucial aspect of multifamily investing. Depreciation is like a gradual wear and tear allowance for your property on your taxes. It's the idea that buildings and other improvements lose value over time due to age, use, and general wear. It acknowledges that a property will eventually need repairs or updates, and helps offset those costs by reducing the amount of taxes owed.
Cost segregation offers significant benefits for tenant in common (TIC) owners of multifamily real estate. By conducting a cost segregation study, TIC owners can accelerate depreciation deductions, resulting in immediate tax savings. This is because a cost segregation study identifies and reclassifies certain components of the property, such as personal property and land improvements, to shorter depreciable lives. As a result, TIC owners can claim larger depreciation deductions in the earlier years of ownership, providing them with increased cash flow and reducing their tax liabilities.
In this second video in our Tax Benefits of Real Estate Investing series, we break down the tax treatment and calculations involved in depreciation and explore strategies to optimize depreciation deductions.
Presenters:
Dave Mikkelsen, Director of Investor Relations, IMG
Ric Say, CPA Partner, LucoveSay.com
In Part I of our Tax Benefits of Real Estate Investing video series, we talk about the difference between short-term and long-term capital gains and how they affect taxes in real estate investing.
Short-term capital gains occur when you sell a property within a year of acquiring it, while long-term capital gains apply when you hold the property for more than a year before selling. The key distinction lies in the tax rates: short-term gains are taxed at ordinary income tax rates, which can be higher, while long-term gains typically benefit from lower capital gains tax rates.
Understanding this difference is crucial for multifamily investors as it impacts their overall tax liability and financial planning strategies.
Presenters:
Dave Mikkelsen, Director of Investor Relations, IMG
Ric Say, CPA Partner, LucoveSay.com
In this discussion, we introduce important estate planning topics that apartment owners should consider when planning for the future of their property and assets.
- Reasons to establish a trust and avoid probate, or the legal process that happens after someone dies to settle their estate (which includes their property, money, and possessions).
- Benefits of a simple trust to ensure that assets are protected and distributed according to the investor's wishes while minimizing tax burdens for beneficiaries.
- The concept of portability, a valuable provision that allows a surviving spouse to utilize any unused portion of their deceased spouse's federal estate tax exemption.
- Using tax-deferred exchanges and the possibility of a stepped-up basis, which can affect how much tax your heirs might have to pay.
- Getting organized and staying current with whatever estate plan you have in place.
Presenters:
Dave Mikkelsen, Director of Investor Relations, IMG
Jim Krupka, Owner/Estate Planning Attorney, JimKrupkaLaw.com
IMG's Guide to Estate Planning* can help you organize your thoughts and important documents in preparation for meeting with your estate planning team.
Download Our Free Estate Planning Guide (PDF) →
IMG welcomes the opportunity to share how fractional interest real estate ownership can become a part of your legacy planning. Investment strategies like the 1031 exchange may limit your tax liability and maximize the value of your legacy gifts. To learn more about our tax-advantaged 1031 exchange opportunities, contact our Investor Relations team at (747) 262-5600 ext. 652.
*Disclaimer: This communication and the information contained on this website are provided for general informational purposes only and should neither be construed nor intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Investors Management Group, Inc. (“IMG”) does not provide legal or tax advice. Consult your team of skilled professionals, including your financial planning professional, estate planning attorney, tax advisor and/or trust officer as you develop or modify your financial planning strategies.