How to DEDUCT 100% of Real Estate Losses from your W2 income

it's going to help me to do it anyways while i just say that thank you all for listening and uh let's hustle baby man what does it really take until it's going 10x on social media going to social media and getting freaking know getting known on social media that's where it's about get known on social media so i'm going to go on social media now and i'm going to go try to give some content let's do it boom content you know what we're talking about content let me tell you something about content right here see this right here see that right there okay let me go to this really briefly okay so we have over here this is a real estate investor this is for the real estate investor that has questionably passive if they're not sure right if they're not not if it's there if they're a real estate professional no problem like this is about how to deduct losses passive losses not only real estate but that's kind of what the majority of times that i've seen that's the most what i focus on that i've seen focus on the people that i've worked with blah blah blah okay fine so passive losses right how to deduct people who have passive income as well as active income there are often passive losses that they that incur especially in real estate which is why it's so important topic in that area industry there are losses due to depreciation or whatever else the reasons for the losses are that if it's passive if it's only passive income you will not be able to take any of the losses zero loss deduction passive income a second hello lunchtime but before we get there let's go over this really quickly passive right if it's purely passive which means if somebody else is running the business for you and you're just getting passive income right that's great you can deduct your operational losses right anything that costs to run it but if you have a paper loss if you have a deduction if you have any even if it's a real operational loss but it's a zero but it's a negative you're not gonna be able to deduct that loss from your active income got it so let's say you make a hundred thousand dollars in your active income work a w-2 job you get a hundred thousand dollars and let's say you have a ten thousand dollar loss on your real estate income passive real estate income you know what you're gonna be paying taxes on your hundred thousand dollars doesn't matter that you had a ten thousand dollar loss got it okay now check this out if you're active if you're considered active and there's criteria for each of these right criteria there's gonna be much criteria i'm not going to go into all the details of the criteria right here right now but it is just no these are the terms you're going to be looking for and these are the concepts you're going to be looking for so active active income if you are active in your real estate right you can deduct up to 25 000 of your losses of your passive losses got it up to 25.000 so again the same scenario 10 000 loss but you're active and 100 000 active income wt income you will only pay taxes on your 90 90 000.99 90 000 right okay now but however if you have a hundred thousand dollars in uh w2 income and you have a fifty thousand dollar passive loss you know what you're gonna be paying taxes on seventy five thousand dollars get it because not you know don't get to deduct the whole fifty thousand dollars okay because you only get capped out at twenty five 000 when you're active however if you are a material participant if you mature a participant in your real estate venture you know how much you can deduct of your losses 100 of your losses so in that same scenario not the first scenario the 10 000 loss for the second scenario 25 50 000 loss you will pay taxes on how much fifty thousand dollars only why i got a hundred thousand dollar w-2 i'm gonna slow down a bit hundred thousand dollars in the w-2 fifty thousand dollar loss makes what three thousand dollars left even though it's real estate right now so it was a bit of a misnomer when i said in the beginning that you can deduct passive 100 passive losses right because you're not considered passive anymore you're considered material participant right here you're active you're your material so don't go writing down or telling anybody you know oh i'm deducting 100 of my passive losses it's not passive losses it's material however what the difference between passive and material this last one right here is real estate professional right so 100 also there's a perception professional but my question is the difference between a passive passive passive income passive losses and material participant there's going to be about seven criteria and you have to only meet one of them so it's going to be critical for you for you to know what those criteria are and to know what the criteria is and to make sure that you are a material participant that's all so i won't go into all the details about but i'll just tell you one way to be material to be my material participant just one way to be able to material participant is if you work 500 hours per year per year or more on that business right 500 hours you know how much that is per week well there are 50 how many hours 50 50 how many weeks in a year 56 53 52 52 i think so that's about 10 hours per week that's about an hour plus per day got it possible for sure hour per day to deduct 100 of your losses you can do it you can do it right material participant that's it so this episode on real estate losses how to deduct 100 of real estate losses by being a material participant have a great day this is wander cpa

Channel: Wander CPA

Views: 2,244

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Id: C1eFdRGn6Hc

Length: 6min 13sec (373 seconds)

Published: Thu Oct 15 2020