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ContinueIn episode 6 Logan Ransley talks tax with investor and expert CPA, Ryan Bakke, exploring how you can leverage the tax code to increase your ROI.
In this episode, we talked with Ryan Bakke about how real estate investors can leverage the tax code to increase their portfolio ROI and achieve their financial goals faster.
Ryan Bakke is a qualified CPA and owner of MLS Consulting. He is passionate about sharing his knowledge with real estate investors across the US to help them build generational wealth and reach financial freedom. And the first step to achieving this, he says, is to improve your financial literacy.
Real estate investing comes with a variety of tax benefits if you know how to use them. In this interview we dug into some of the major strategies every investor needs to be familiar with.
"A couple of the tax benefits that I've used for my single-family homes include using the home office deduction. If you have an office in your house, you can actually take a percentage of your house and write off your mortgage, your utilities, your insurance, and everything for that property," Ryan said when asked about some key tax strategies every investor should know about and be leveraging.
He went on to say, "Another one is, especially for the single-family homes, is depreciation. Depreciation is one of the largest tax benefits out there for people who buy real estate, because what it allows you to do is it allows you to write off the asset over time. So let's say you bought a single-family home for $100,000, and you have a $20,000 land value on that. Well, you can actually write off that property over 27.5 years. So you can write off the $80,000 value of that property over 27.5 years, which means you're looking at a write-off of $2,800/ $2,900 a year."
"You can even accelerate that by doing things like cost segregation. For a cost segregation study, basically what they'll do is they'll go through the property, figure out what the different assets are, and they'll accelerate the depreciation on each of these, usuallly over five years or seven years or fifteen years."
A final tax stategy Ryan talked about was 1031 exchanges which allow you to exchange a like properties when you sell then to defer capital gains tax."It's a really great way to maximize your gains, especially if you're trying to scale your portfolio."
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Or visit his website where you can find free tools and eductational resources www.learnlikeacpa.com
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The Profitable Rental is a podcast by Landlord Studio. We interview real estate experts and discuss practical advice on how you can build a profitable real estate portfolio.
Stay tuned for the next episode where we’ll get stuck into even more tax strategies for landlords to maximize profitability and stay on top of their numbers.
