Real Estate

I absolutely love getting the chance to interact directly with my TaxLoopholes clients (and some Diane’s Mastermind clients and my tax firm, Diane Kennedy’s Tax Services clients) when there are new tax issues happening.

And that’s exactly what happened this past weekend. We spent a lot of time going over the Real Estate Professional audits and the distinctions that the IRS is making. There is a lot of confusion among tax professionals as well on this one.

There are TWO requirements to taking the real estate passive loss deduction against other income if your income is over $150K:

On Saturday I start a brand new seminar. Most of my seminars are about tax strategies. This one is part tax and part about creating passive income.

And, for once in my life, I’m not highlighting real estate as the best strategy for everyone. This isn’t going to be a post about why real estate is a bad investment or why anyone who invests in it is a loser. Real estate investing works, but it’s not the only game in town and I think we’ve lost sight of that.

A year ago, I would have told you that you needed to avoid real estate dealer status and that you should always take advantage of the capital gains exclusion for primary residences.

Boy, things have changed. And as commonly happens when law and policy changes rapidly, not all of the loopholes are thought through. In fact, there are a couple of loopholes right now that I’m not sure Congress and the IRS intended. But, nevertheless - there they are.

For the past 6 months or so, we’ve been reporting on the increase in IRS audits of Real Estate Professionals. And at the same, I offered a free review of tax returns to see how much my full-service tax firm, Diane Kennedy’s Tax Services, could save them.

Not surprisingly, we’ve been flooded with tax returns. I know Richard (my husband) had 90 phone calls to return yesterday. (He didn’t make it, but he’s going to keep working to get all caught up through the weekend.)

I made it through the IRS Audit Handbook targeting Real Estate Professionals this weekend. Wow! It’s the play-by-play guide to how they’re planning to collect millions of dollars in taxes, penalties and interest from real estate investors.

Look for the brand new “IRS Survival Guide for Real Estate Investors Who Own Real Estate” later this week. This is one you’ll want to get right away and study. That’s because there are some changes you might want to make right away to your own personal strategy. One of those changes regards Limited Partnerships.

It’s probably the biggest understatement of the year to say that real estate has been hard hit this year. Some investors got out at the right time and others had enough cash to carry them through the tough time. Those are the people who are jumping back into the market with both feet.

Others didn’t have it quite so well and are trying to find ways to recover or maintain.

There might be a silver lining to the lowered real estate values, at least when it comes to estate planning that has been delayed too long.

There has been a lot of talk in the past about the greatest transfer of wealth in the world’s history that is occuring right now. As aged parents pass away, many Baby Boomers are trying to escape estate taxes that they had not anticipated.

I was driving in Phoenix the other day and went by a building I pass by frequently. It’s a beautiful office building that sold for $40 million in 2001 or 2002. The reason I remember it so vividly is because I remembered the back story on the building.

The Trust Sandwich(tm) teleseminar has been downloaded now over 1000 times. Wow. That maybe a record for just a few days up on its new site at Trust Sandwich. I’ve had a couple of questions, though, that I want to address. First, a few people have asked me why their real estate agent or attorney doesn’t know about that. I don’t know why they don’t know about it.

It’s the second hottest fund category. Who knew that stock investors would fall in love with real estate? In this case, REITs (real estate investment trust) are up more than 7%. The leaders are natural resource funds up 13%.

Leading REIT indexes were down more than 15% last year, so the 7% gain hasn’t recovered the loss yet. But, compared to other real estate markets, this gain isn’t that bad.