#19 | Government Incentives and Tax Breaks for Real Estate Investors

Practical Tax with Steve Moskowitz

Steve and Cliff discuss the many tax benefits and incentives available for real estate investments. Listen to the full episode to learn more! Episode Transcript Intro: You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm. Steve Moskowitz: Welcome everyone. Thank you for joining our podcast. And we're looking forward to telling you a lot of tax savings in a very good area here, real estate. Traditional wealth has been built with real estate and there's all kinds of advantages to it. One of my favorites is OPM, other people's money. And there's all kinds of things here. For example, one of the things that Cliff is gonna tell you about, there's a government deal where the government will pay for 39% of the real property you choose to buy. You like that? I'll say it again. The government will pay 39% of the price and guess what? That's a gift. They just give it to you. It's not a loan. You don't have to pay it back. They just give it to you. And when somebody gives you something nice, what do you say? Well, most people say, thank you, but lawyers say more. I want more. Want to talk about all kinds of things like how you can make a real estate investment, a tremendous amount of money, profit and legally not pay any taxes on it. And this is the type of things that people look at and they say, look at the wealthy, look at the Fortune 500. They're making all this money, sometimes billions of dollars they'd be in profits and not paying any taxes legally, how can that be? And here's why. There's two purposes for the tax law. One we all know about is get money out of us, extracting taxes, but the other one is in democracy, the government can't order us to do things, even though it's good for the economy or it's good for society, they can't order us. So, how's the government get you to do something they want you to do, but they can't order you? They give you a tax benefit. And that's what this is all about. And you know, a lot of people just grumble and cry about, oh they take so much taxes out of my earnings. And that's true. But what we're gonna talk to you about today, although the wealthy people do it, you don't have to be wealthy. This applies to any socioeconomic group. You can be a regular normal middle class person, do all these things, and our goal is to get you to be those people that other people point to and say, look at that wealthy guy, look at all the money he's making and he's not paying any taxes on it. And maybe some of that's because you listen to us on this webinar. Without further ado, I'm gonna introduce my friend and colleague, the head of our tax department, who's also an accountant as well as being an attorney, Cliff . Cliff, you want to take it away? Cliff Capdevielle: Sure, Steve, thanks. So, lot of wealth in America has been generated with real estate. And as you say, Steve, one of the key differentiators is the ability to leverage, use other people's money, take out loans and put down a fraction of the cost of a piece of real estate and then reap the rewards as the value of that real estate increases. I'm up in Incline Village. It is now the average, Steve, the average price for a home up here and this zip code, can you guess? Steve Moskowitz: That's a toughie. Coming from San Francisco, shacks go for millions. Cliff Capdevielle: It's five million dollars is the average house. So, that is skewed because you have Larry Ellison and the other Silicon Valley billionaires up here with properties in the 50 hundred million dollar range. But you can make a lot of money in real estate just by holding it for a long period of time. And you can purchase real estate, as you said, using other people's money, leveraging that and deducting the interest that you pay for real estate. Now, it's recently been limited on personal residences, but on investment property,