{"id":4309,"date":"2022-11-17T08:29:45","date_gmt":"2022-11-17T08:29:45","guid":{"rendered":"https:\/\/imsfund.com\/?p=4309"},"modified":"2022-11-17T08:29:45","modified_gmt":"2022-11-17T08:29:45","slug":"landlord-tax-loopholes-thatll-help-you-pay-zero-taxes-in-2022","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2022\/11\/17\/landlord-tax-loopholes-thatll-help-you-pay-zero-taxes-in-2022\/","title":{"rendered":"Landlord Tax Loopholes That\u2019ll Help You Pay ZERO Taxes in 2022"},"content":{"rendered":"


\n<\/p>\n

Non-investors hate real estate tax loopholes<\/strong><\/a>. It always seems like the wealthiest landlords, apartment owners, or short-term rental hosts walk away with not only massive income but little-to-no tax bills<\/strong> at the end of the year. Are investors unethically avoiding taxes OR are they carefully, quietly using the tax code to build wealth <\/strong>and bring their tax burden down to zero? And if the big investors can do it, can average investors use the same strategies?<\/strong><\/p>\n

Whether you own one, ten, or a thousand rental units, Matt Bontrager<\/strong>, CPA at TrueBooks, has a solution for you. He\u2019s been working with real estate investors for years to help them minimize their tax burdens<\/strong> and maximize their portfolio values. And unlike most CPAs, Matt can explain these strategies in a way that excites you, instead of slowly lulling you into a depreciation-induced dream.<\/p>\n

Matt touches on the most powerful ways to eliminate your taxes in 2022<\/strong>. These tax strategies<\/a> work for almost every type of investor, whether you\u2019ve got a full-blown business or just a short-term rental side hustle. These tax tactics<\/strong>, when used correctly, can allow you to walk away from 2022 with a bigger refund<\/strong>, no tax bill, or years\u2019 worth of losses to roll over so you walk into 2023 in a better reposition than ever before.<\/p>\n

\n

David:
This is the BiggerPockets Podcast, show 689.<\/p>\n

Matt:
I can buy a $50,000 car, put no money down, and if, let\u2019s say, it\u2019s over 6,000 pounds and all of that, I can get a $50,000 deduction for not putting any money down. So that\u2019s why depreciation is so powerful because you get so much more. You get so much bang for your buck, we\u2019ll say.<\/p>\n

David:
What\u2019s going on, everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast here today with my co-host, Rob Abasolo, who brought in one of his friends and people that work with him, Matt Bontrager, who is a managing partner at TrueBooks CPA and does Rob\u2019s tax planning. So we got into a great conversation with Matt, which I think was maybe one of the most fruitful and simplistic explanations of how to save money in taxes that I\u2019ve ever had. Rob, what did you think?<\/p>\n

Rob:
Yeah, man. So this specific episode really came out of one of the more common questions that we get, but a very specific YouTube comment. Is it okay if I read it really fast?<\/p>\n

David:
Yeah. Let\u2019s hear it.<\/p>\n

Rob:
Okay. So it says, \u201cHey, Dave and Rob. I\u2019m a big fan and think you guys are great.\u201d So let\u2019s just take a minute to marinate on that. We\u2019re great, David. Don\u2019t forget that. \u201cI think it would be awesome if you guys could go deep into the short-term rental loophole, go deep on the tax savings of bonus depreciation through cost segregation, which you touched on a little in this episode. Thanks, and keep the great information coming.\u201d So, yeah. I think the cost segregation, the short-term rental loophole or hoophole, whatever you want to call it, it\u2019s a really big topic right now. I\u2019m seeing it all over Instagram, all over TikTok, and we bring in a pro to actually come in, and lay it down, and just give us all we need to know. So I\u2019m excited because I think a lot of people after today\u2019s episode are all of a sudden going to be like, \u201cHmm, how do I buy an Airbnb to cancel out my taxes?\u201d So, yeah. I\u2019m excited.<\/p>\n

David:
Yeah, and if we\u2019re being completely transparent about this, this is something that a tax preparer would probably charge you thousands of dollars to teach you. You\u2019re literally getting that, and this is not a sales pitch, for free in this episode. This is what Matt would charge people to tell them. This is what my CPA charges me to talk about it. In fact, I think they even charge me sometimes to go look up the information that they are then going to go charge me to tell me about. Right? So if you like getting free information that will save you tens of thousands of dollars or more, would you please do us a favor and leave us a rating or review on Apple Podcasts, Spotify, wherever you\u2019re listening to this? That\u2019s all that we ask for. We\u2019re never going to charge you for information. We just need to make sure we stay at the top of the charts.<\/p>\n

Rob:
With that, let\u2019s get into today\u2019s\u2026 Are you going to throw it to me, or can I? Sorry, I was feeling froggy. Did I steal your thunder?<\/p>\n

David:
I like that you just grabbed it, and took it, and ran with it. Yeah. If you\u2019re feeling froggy, leap.<\/p>\n

Rob:
All right. Okay. For today\u2019s quick, quick, quick tip, whenever you\u2019re trying to plan out your taxes, it\u2019s best to really have a good understanding of your accounting and your bookkeeping at least by October so that you have roughly about a quarter of the year worth of time to figure out how you can get rid of some of that tax bill, slice and dice that tax bill to hopefully zero if you\u2019re using all the right tax strategies and tricks out there. Otherwise, if you\u2019re waiting until December to get all of your bookkeeping in order and you\u2019re trying to figure all this stuff out, you\u2019re not going to have enough time, especially if you want to buy more real estate. If you want to buy more houses, that takes time. It takes two, three, four months sometimes. So the faster you can start planning, the more time you give yourself, the more likely you are able to cut your tax bill pretty significantly. How did I do, Dave?<\/p>\n

David:
Amen to that. In fact, that was only one take, which I don\u2019t know that I\u2019ve ever seen you do.<\/p>\n

Rob:
No.<\/p>\n

David:
You\u2019re clearly developing very nicely.<\/p>\n

Rob:
Thank you. I\u2019ve learned from the best.<\/p>\n

David:
Now, if you listen all the way to the end of today\u2019s show, you will actually hear us give you some examples of how to take all of the tax strategy we\u2019ve given you with other strategies like house hacking, and borrowing money, and leveraging. It all comes together for some very, very simple ways that you could shield your W-2 income with very little money down. That\u2019s the beautiful thing about real estate is as you\u2019re putting in your time listening to these podcasts and you\u2019re developing your tool belt here with all these different tools, you put them all together, you can create something beautiful. So you\u2019ll see at the end this culmination, this climax of how you can take all this information, put it together, shelter your income, and then take that tax savings, and put it right back into real estate investing. Let\u2019s bring in Matt.<\/p>\n

Rob:
It\u2019s going to be a good one. All right. Matt Bontrager, welcome to the BiggerPockets Podcast. How you doing, buddy?<\/p>\n

Matt:
Doing great. Super pumped to be here. This is a huge thing for me.<\/p>\n

Rob:
Well, awesome, man. Well, I want to throw you right into the fire here if you\u2019re cool with it because we actually get a lot of tax questions, and you are my tax guy. You are my personal CPA, and I was like, \u201cI want to put you to the test in front of everyone at home.\u201d Are you up for the challenge?<\/p>\n

Matt:
I am. Hit me.<\/p>\n

Rob:
Okay. First question, fellow house hacker. \u201cI have my first house hack, and I\u2019m wondering how to best list it on my taxes. Do you get a difference between claiming the property as a rental versus a personal residence? If so, which would be better to do? I know this varies state by state, but I\u2019m sure there\u2019s some sort of commonalities. I\u2019m in DC, by the way, in case you have firsthand experience.\u201d Matt, what you got?<\/p>\n

Matt:
Okay. So, first, house hacking is a great way to build wealth starting out. Right? So when it comes to house hacking, part of the property is going to be used as a rental, part of the property is used as your primary. It\u2019s going to be more advantageous to, one, take the expenses like your property taxes, your mortgage interests, utilities, and things like that against the rental income that you\u2019re receiving because you\u2019re going to have to report the rental income from the tenants you have in the property with you. So you\u2019re going to want to lower that income with those expenses, and it\u2019s basically going to be pro rata. So if half of the home is listed for rent and used for rent, you would write off half of those utilities, half of that mortgage interest, and things like that. So, yes, better to take against the rental income.<\/p>\n

Rob:
Okay. Okay. Very good. Very good. Very concise and very clear. Good job, man. We didn\u2019t even feed you this question beforehand. Question number two, \u201cAt what point did you decide to get an accountant? I typically do my own taxes. I just started my investment property portfolio last year, and I have less than five doors. I\u2019m on track to have 10 total by the end of the year. Also, I have an LLC, but I go back and forth on whether it\u2019s really necessary, right? At least until I reach 10 more doors.\u201d So I guess they\u2019re asking, at what point shall someone consider an accountant?<\/p>\n

Matt:
Really good question because we\u2019re also going to segue into when you should hire an advisor versus a tax preparer or an accountant. My answer here would be I\u2019m a fan of hiring a professional when you either become a landlord or when you have a small business. At that time, you need somebody that knows what they\u2019re doing. But when it comes to hiring an advisor versus just like a tax accountant to prepare your tax returns, at this pace, for what you\u2019re on, I would hire a CPA or an advisor that can help you tax strategize, not just prepare your tax returns.<\/p>\n

Rob:
All right. All right. Take a deep breath. We don\u2019t ever do this, but how do you feel after? Just giving you a couple of, I don\u2019t know, softballs, curveballs? I don\u2019t know which one these would be classified for you. Probably softballs.<\/p>\n

Matt:
Both were pretty high-level softballs, but the first one was good because that does get a little bit nuanced with, \u201cHey, I\u2019m living in this property, but also renting it.\u201d So there\u2019s some complexity there with separating the expenses, but no, those were good.<\/p>\n

Rob:
Okay. Well, awesome. Well, now that we\u2019ve proven your credibility to everyone at home, tell us a little bit about yourself, man. What do you do? Give us some background here.<\/p>\n

Matt:
Yeah. So I\u2019m 30 years old. I\u2019m a dad of three hooligan kids. I have really young kids. I got a three-year-old and twin one-year-olds, and I\u2019m a CPA. I love money. I love finance. I went to school for accounting. Luckily enough, it was one of those degrees that I got where I use it every day, and I\u2019ve always been in accounting.<\/p>\n

Rob:
Yeah, yeah, because I text you every day. I\u2019m like, \u201cHey, can I write this off?\u201d<\/p>\n

Matt:
I got to stay sharp, so that\u2019s what keeps us sharp. No, it\u2019s great, and so I\u2019ve been in accounting since I left school. I\u2019ve stayed in public accounting, which is pretty important to recognize because I service a multitude of clients. Right? I\u2019m not working at an accounting firm, just servicing one client, or I\u2019m not working at one client\u2019s in their backend accounting office. Yeah. So, 30. I got a family going, growing the CPA firm that I\u2019m a part of, I\u2019m the managing partner here at TrueBooks, and just staying sharp, helping people with their taxes, strategizing to bring it to zero if we can.<\/p>\n

Rob:
Yeah.<\/p>\n

Matt:
Right? So, that.<\/p>\n

Rob:
Yeah.<\/p>\n

Matt:
Yeah.<\/p>\n

Rob:
That\u2019s the goal.<\/p>\n

Matt:
Yeah, always the goal.<\/p>\n

Rob:
I\u2019m very jealous because David, I think David is\u2026 He bought a commercial property that wiped out some of his tax bill there for a couple years. Right, David?<\/p>\n

David:
Yeah. Two years, basically, I got covered.<\/p>\n

Matt:
Nice.<\/p>\n

Rob:
So, Matt, you touched on a couple points here, but can you walk us through the difference between being a tax preparer and a tax advisor because I know that they\u2019re two very different functions? Is that right?<\/p>\n

Matt:
They are. So most people that are using a tax accountant, the old school style is they\u2019re going to prepare your taxes. So I\u2019ve always made the joke that it\u2019s awesome because anybody I shake hands with, I can do business with because they need to file a tax return. But when it comes to you running a business or becoming a landlord, growing a portfolio, you need more than somebody that just understands the forms that you\u2019re sending them and preparing your return. All they\u2019re doing is really filling out the report card for what happened in the previous year, and so what\u2019s important now is you need that next level of advisory, somebody that\u2019s going to help you forward plan to, \u201cHey, buy this building. If you do, it\u2019s going to lower your tax liability by this many dollars,\u201d or, \u201cIf you do this, within a couple years, you will be at this stage.\u201d
So somebody that\u2019s helping you plan and look at things in the future is more of that advisory role, and most people now, they either do their taxes themselves like we just saw in that question, which is fine. I used to do my taxes myself as an accountant before I started to do tax. But now, once things get a little bit more complex, I would at least hire a professional to prepare your returns. You\u2019ll get a couple questions with them and things like that, but when you\u2019re starting to grow and run a business or grow a portfolio, you need to sit down with somebody and look at everything holistically, which is where an advisor comes in. So, for example, at our firm, those are two different services. We have a tax preparation team, we have an advisory team, and it\u2019s because those roles are completely different. So, two components to this game, for sure.<\/p>\n

Rob:
Yeah. I miss the good old days where\u2026 Basically, from the ages of 18 to 26, I could log onto TurboTax and put a couple thing. Maybe I would even get a return. Maybe get $2,000 and $2,000 then.<\/p>\n

Matt:
Yeah, refund.<\/p>\n

Rob:
Then, I became self-employed, and I\u2019ve really understood the importance here of proper strategy really early on in the year. So what is it exactly that you do? What\u2019s your particular specialty?<\/p>\n

Matt:
So we specialize in three things. Accounting, which we\u2019ll also go over. So doing the books and the bean counting. We do tax preparation, and then we do tax advisory. I specifically am focused on the advisory side and in real estate. So 99% of our clients have a touch point in real estate, whether they\u2019re agents, landlords, developers, whatever it may be, but we specialize in tax, and then in a sub-sector of real estate. The most tax-advantageous moves you can make are in real estate.<\/p>\n

Rob:
Well, I can speak to your advisory skills, my friend, because you saved me\u2026 I don\u2019t know. I would say at least $150,000 in taxes, but probably more than that, and hopefully, more than that this year too. So I know we have a lot to cover here, so I want to get into some questions and just understand and help people understand, really, everything that they should be thinking about as they start planning for taxes and everything that goes into it. Is that cool?<\/p>\n

Matt:
Yeah, for sure.<\/p>\n

Rob:
So why is your accounting so important for anybody in the real estate world, or if you\u2019re self-employed or if you\u2019re really trying to strategize with the whole tax side of things, what makes accounting particularly important?<\/p>\n

Matt:
So there\u2019s a few reasons of just why it is the core backbone to every business. One, if you\u2019re looking to get a loan, your loan officer is going to ask for tax returns, and year-to-date P&Ls, and balance sheets. So if you don\u2019t have your accounting, you will be scrambling. If you\u2019re going to sell your business, they\u2019re going to want to see the profitability, the balance sheet, what your numbers look like. If you\u2019re looking to JV with a partner, they\u2019re going to want to see how your business is doing, see the KPIs. Last, what hits us closest to home is people see us, and they\u2019re like, \u201cGreat. I\u2019m in this situation to where I can use an advisor.\u201d The problem is if you come to us, and we go to sit down and tax plan, and you don\u2019t know what your year-to-date numbers are or any numbers, we can\u2019t even start.
So while accounting is boring and it\u2019s like, again, bean counting the green visor in the back room, it is literally the backbone to everything business related. So that\u2019s why I tell people. I just got off a call earlier, and they were saying, \u201cHey, I\u2019m just starting out. I\u2019m about to buy my first flip. I have one rental. What would you do before year end?\u201d I posed the question of, \u201cCould you pull your financial statements right now through at least September?\u201d That answer was no. My answer to him was, \u201cI would scramble to get your accounting caught up to at least October before doing anything else because again, it\u2019s the first step to anything else that you want to do.\u201d Again, it can be costly, but it\u2019s such a requirement, which I think you both now could attest to. Rob, we\u2019ve had a lot of conversations about accounting.<\/p>\n

Rob:
Yeah.<\/p>\n

Matt:
So, again, I can\u2019t emphasize enough. No matter what talk I do, if I\u2019ll get to do a speaking engagement, it always ends with and comes back to the importance of accounting.<\/p>\n

Rob:
Yeah, and just to clarify for people, punching in on that, that\u2019s bookkeeping. Right?<\/p>\n

Matt:
Exactly.<\/p>\n

Rob:
Properly understanding how much cash flow is going into your business, how much cash flow is leaving. Are you profitable? There are months where I\u2026 Really, when you just look at your bank transactions, for example, it shows you two numbers: money going in, money going out. If you\u2019re looking at that, it\u2019s a very, in my experience, inaccurate way of really understanding the profitability of your business just because money comes in and out at different points in a month, but it doesn\u2019t necessarily reflect\u2026 I don\u2019t know. It could have implications for many months down the road and stuff like that.
So, for 2021, I was having a VA do a lot of my bookkeeping, but my business exploded. Then, I gave you my books, and you were basically like, \u201cYes. Thank you for these. For 2022, would you mind putting them in a garbage can, and pouring gasoline on it, and lighting it on fire?\u201d So, now, we\u2019re having to scramble to get back, and I know that one of the main questions we get in the forms a lot is, \u201cShould you wait until you\u2019re established to dial in your bookkeeping?\u201d Really, it\u2019s the first thing that you need to do. Right?<\/p>\n

Matt:
The very first thing, and that\u2019s where I tell people, \u201cIf you\u2019re comfortable using a spreadsheet,\u201d I mean, I\u2019m in spreadsheets hours a day, \u201cCool. If you can use a spreadsheet and track your money in and out, your expenses, your income, great.\u201d But I\u2019m a fan, and I\u2019m not affiliated with them, but QuickBooks online. They make it so easy. You sync your bank accounts directly with it. The money comes in and out. You just classify what it is, you\u2019re done. But when you have the cash flow, and it makes sense, and you\u2019re a flipper, you need to hire a bookkeeper.
If you care about your finances, and your tax strategy, and all of that, you\u2019re going to need your accounting because that\u2019s the other thing. It blows my mind. Accountants are very risk-adverse, but I\u2019ve seen so many people make a ton of money, and they have no clue where it\u2019s at, how many bank accounts they have, what their P&L looks like. All they\u2019re worried about is the day-to-day. So that\u2019s when I say, \u201cThe first thing you can do when starting a business, buying a rental, whatever, getting your accounting squared away. Either you\u2019re going to do it or you\u2019re going to hire somebody to do it.\u201d<\/p>\n

Rob:
Yeah. So, really, a follow-up on here is, because you did talk about it, if you know how to work a spreadsheet\u2026 I do remember when we were doing taxes this year. I mean, when my bookkeeping was still getting caught up, that was a big back and forth, \u201cHey, do you have this?\u201d \u201cNo,\u201d and I\u2019m reporting back to the bookkeeper. But then, I brought you a surprise set of taxes. I was like, \u201cHey, my other CPA dropped the ball. Can you do my taxes?\u201d \u201cYeah.\u201d I gave you a spreadsheet that had all of those listed, and you were able to really crank out the return super fast. So, the spreadsheet method, that\u2019s a totally viable way of at least tracking expenses when you\u2019re starting out. At what point should you convert over to something a little bit more robust like a QuickBooks Online account?<\/p>\n

Matt:
I\u2019m honestly a fan of\u2026 I don\u2019t care if it\u2019s a lemonade stand. If you\u2019re willing to pay the 20, 30 bucks a month for QuickBooks, I would come out of the gate with an accounting software because you\u2019re not in business to just start up and fail in six months. So if you plan to be in business, you might as well come out of the gate with what you need that will sustain you when you\u2019re doing $5, $10, $20 million in revenue. But if you wanted to do the spreadsheet, I would say to break\u2026 If you have more than a hundred transactions a month, I would go to an accounting software because then, if you care about your time, you will get so much of your time back using an accounting software.<\/p>\n

Rob:
Well, a fun fact. In college, I took Fundamentals of Accounting, and legitimately, for the first 15 minutes of every class, we played Lemonade Stand, which was a new app back in the day on the iPhone, and everyone was always like, \u201cOkay. We get it,\u201d because I guess it was a good illustration of accounting in some capacity, but the professor was obsessed with it. Sometimes we would spend the whole class playing it. We\u2019d be like, \u201cTeacher, the test is next week, and we still haven\u2019t actually learned what you\u2019re trying to teach us, so.\u201d<\/p>\n

Matt:
Yeah.<\/p>\n

Rob:
So, yeah. I get a little PTSD there, but moving on, man. One question that we get\u2026 I mean, this is one of the hottest topics right now. We\u2019re going to actually get into a lot of hot topics here. Hot topics. What is a cost segregation, and when can this be performed? I think there\u2019s a lot of confusion here, a lot of people that don\u2019t really know all the ins and outs. I\u2019d love to dive into this, if you don\u2019t mind, just imparting some wisdom on the greatness that is cost segregation.<\/p>\n

Matt:
So when you purchase a property, you are buying the land that it sits on. You\u2019re buying the actual structure of the building, the roof, the plants outside, the windows, the carpets, the paint, all of that. All a cost segregation study is doing is you are telling\u2026 Let\u2019s assume you hire a firm to do it because you can go one of two ways. You can DIY it online and use a software where you\u2019re telling them what you paid for it, you\u2019re submitting pictures, and things like that. Let\u2019s assume you hire a firm to do it. All they are doing is going in, and evaluating this property, and saying, \u201cOkay. We know that you bought this asset, including the land,\u201d and they\u2019re going to break out the cost of that into certain buckets. Why does that even matter?
Bonus depreciation and depreciation alone is the holy grail for people in real estate. It is basically you getting the expense for likely sometimes money that you never even paid. So if you put $10,000 down on a house, you can get a way larger depreciation expense just because it\u2019s based on the purchase price, not based on how much money you put down. So, at the end of the day, a cost segregation study is literally taking what you paid for something, the cost, and segregating it into these smaller buckets so that when they\u2019re done, you literally take that PDF report, stash it away, give a copy to your accountant so that they can do your tax return correctly, but you honestly hope to never use the report other than what your accountant needed it for because\u2026 Why do you need the report?
Let\u2019s assume you buy a rental, you do a cost segregation, you get this huge depreciation number, and then you later get audited, and the IRS goes, \u201cHey, how did you come to that? What do you have in your back pocket?\u201d The cost segregation study from a reputable firm, an engineering-based firm that now you can use to defend that audit, but that\u2019s all it is. It\u2019s really an evaluation and a cost segregate report of this piece of property you just purchased. I mean, we can dive into when I would do one and stuff like that, which\u2026 I mean, it\u2019s fairly quick.
If you\u2019re a landlord of long-term\/short-term or you\u2019re in real estate full-time, it\u2019s very likely you should do a cost segregation study. To the point of when, we\u2019re about to close out 2022. Let\u2019s say I bought a rental right now. I get it up and running by December 1st. It\u2019s rented for those 30 days, and we\u2019re in March of next year, and I want to cost segregate it. I totally can. I can go hire a firm, they can go do that report for me. I just wouldn\u2019t get my tax return done, obviously, until that report is back, and I can compile all my records, but you can do them after the fact too. Quick tip there. I\u2019m always a fan of doing the study, the cost segregation study after you spend your rehab money. So I would buy the property, rehab it, then go in for the study so that they can look at everything as a whole.<\/p>\n

Rob:
Oh, okay. Yeah. That\u2019s a good tip. So, I guess let me punch in on this because there are a few intricacies, I think, with how this works. So, typically, if I\u2019m not mistaken, you\u2019re my CPA, so I\u2019ll let you take all the liability here. Typically, when you\u2019re depreciating a long-term rental, for example, that is depreciated over 29\u2026 No. Sorry. 27 and a half years. Then, if it\u2019s a short-term rental, it\u2019s over 39 years. Is that right?<\/p>\n

Matt:
39 years. Yep.<\/p>\n

Rob:
Okay. Cool. So, basically, every single year, when you\u2019re running your taxes on these properties, you get a small portion of that depreciation that you can write off?<\/p>\n

Matt:
Mm-hmm.<\/p>\n

Rob:
Right? Okay. So if you run a cost segregation report, basically, what this allows you to do is instead of breaking up that depreciation over 27 and a half or 39 years, you can now actually just\u2026 and taking a small portion of it every year, you can take a very large chunk of that depreciation and write it off in the first year?<\/p>\n

Matt:
Exactly. Yeah. Do you want me to hit you with a numbers example? I\u2019ll try to keep it as\u2026<\/p>\n

Rob:
Yes, please.<\/p>\n

Matt:
Okay.<\/p>\n

Rob:
Yeah, yeah.<\/p>\n

Matt:
Okay. So if an accountant is listening to this, they\u2019re going to grill me, but that\u2019s where I want to preface this with. This is an example, a drastic example. If I bought a property for $400,000, I just paid\u2026 and we\u2019re not going to rehab it. We\u2019re assuming it\u2019s rent-ready.<\/p>\n

Rob:
Turnkey.<\/p>\n

Matt:
Let\u2019s say of that $400,000, $100,000 of that value is to the land. The IRS says, which is safe to assume, you cannot depreciate land. It is not going anywhere that we know of.<\/p>\n

David:
Do you mind if I stop you real fast, Matt? I\u2019m sorry.<\/p>\n

Matt:
Yeah. For sure.<\/p>\n

David:
Can you just define what depreciation is so it makes sense why you can\u2019t depreciate land, but you can improvements?<\/p>\n

Matt:
Yes, it\u2019s because\u2026 Think of it as the deterioration of the asset. The best example is cars. How they\u2019re always like, \u201cUgh, don\u2019t buy that new car. It\u2019s going to depreciate the second you drive it off the lot.\u201d Sure, it will, but it\u2019s basically the wear and tear of an asset over time.<\/p>\n

David:
There you go.<\/p>\n

Matt:
Right? So the reason there is why it\u2019s so powerful to that extent is think of the car. I can buy a $50,000 car, put no money down, and if, let\u2019s say, it\u2019s over 6,000 pounds and all of that, I can get a $50,000 deduction for not putting any money down. So that\u2019s why depreciation is so powerful because you get so much more. You get so much bang for your buck, we\u2019ll say.<\/p>\n

David:
Now, the problem with cars, the reason we don\u2019t do this is often, it\u2019s very difficult to make a car cash flow.<\/p>\n

Matt:
Yeah.<\/p>\n

David:
So even if you borrowed 50 grand, you\u2019d be losing that money plus the interest every year. But with real estate, it will cash flow. So it pays for itself. Yet, the IRS still gives you that deduction because technically, it\u2019s losing value as it falls apart. So thank you for that.<\/p>\n

Matt:
Exactly.<\/p>\n

David:
I just know everyone gets confused when they hear depreciation and no one ever wants to admit they don\u2019t know what it is. They don\u2019t want to be the one person who says it.<\/p>\n

Matt:
Yeah. No. For sure, and so right? So to that question that you just mentioned is that\u2019s why land\u2026 Land is land. You can kick it. You can dig it.<\/p>\n

David:
It doesn\u2019t go away.<\/p>\n

Matt:
You can do whatever, but you own that piece of land. It\u2019s not going anywhere, but now there\u2019s a difference between land improvements, which you can\u2019t depreciate. So if you lay concrete and all of that, you can do that, but\u2026<\/p>\n

David:
Mm-hmm.<\/p>\n

Matt:
Okay. So we got a $400,000 house we just bought. We\u2019re going to say $100,000 is land. So we\u2019re left with $300,000 of this pie. For ease of numbers, let\u2019s say the building structure itself, so the roof, the framing, the actual structure and foundation is, of the $300,000, $200,000 worth. Okay? So, now, we\u2019re left with $100,000 of this pie. $400,000. $100,000 was land. $200,000 was the building itself. Now, we\u2019re left with that other bucket of $100,000, and let\u2019s say that that cost segregation study report shows you that the windows that are in that property, the paint, the carpet, the desks, the furnishings, the lights, the fans, the sinks, the cabinets, all of that equates to $100,000 of value.
Now, I\u2019m sitting with that, and I can bonus appreciate that because the rules say every asset that you buy is given a life. If it\u2019s a 20-year or less life, the IRS allows you to bonus appreciate it in the first year. So, normal cabinets, if I spent $20,000 on cabinets, I\u2019d have to take it over five years. But because the bonus depreciation rules allow me to bonus anything less than 20 years, I can bonus that, so that\u2019s where\u2026 In that example, if the cost seg firm evaluates this house, and they say, \u201cYeah, $100,000 is your small assets inside that are five and seven years,\u201d you can bonus depreciate that.
Why that is so important is because if you didn\u2019t do that study, your normal accountant is going to look at, \u201cOh, cool. You just bought a $400,000 house. We\u2019ll say $100,000 is land,\u201d and they\u2019re just going to take the $300,000, divide it by 27.5 which\u2026 Let me run this. Would only give you an $11,000 deduction. But if you went to a cost seg firm, and they say, \u201cWait. We\u2019re going to say only $200,000 is the building, but then $100,000 is small assets inside of it,\u201d you would get a little over $100,000 deduction. So that right there would swing you from probably having to pay tax because you would cash flow and have income profit on paper versus now showing this huge depreciation expense which would drag you to a loss, which is what everybody aims for.<\/p>\n

David:
So to illustrate this point even further, are you saying if I buy a short-term rental, and let\u2019s say it grosses me $100,000\u2026 or let\u2019s say my profit is $100,000. If I take $100,000 deduction, is my tax bill then zero?<\/p>\n

Matt:
If that was all you did, exactly, your tax bill would be zero because now you\u2019re looking at\u2026 Your P&L for that property is zero. You have no taxable income when it comes to that property.<\/p>\n

David:
Normally, you would not be able to depreciate $100,000 of losses because it would be spread out over 27 and a half years or five years for the cabinets. But with bonus depreciation, you\u2019re able to take that long period of time, crunch it up into a short period of time, and take it all upfront.<\/p>\n

Matt:
Exactly. So that\u2019s all you\u2019re doing. All a cost seg report does is, \u201cHey, what in this property that I just bought\u2026\u201d I don\u2019t care if the property is $20 million or $200,000. It\u2019s, \u201cTell me what the 5 and 7-year and 15-year property is so that I can identify the value.\u201d So if I paid a million bucks, what if the value of that property is $300,000? I get to take $300,000 immediately as an expense, and I still get to take the building just over 27 and a half or 39 years. So that\u2019s why they\u2019re so important is because you get a huge depreciation expense deduction, which is likely going to swing you to a net negative or a loss.<\/p>\n

Rob:
Okay. So, man, there\u2019s just so much. Okay. Cool, cool. So let\u2019s say that you do a cost segregation and you take all your depreciation in that first year, you can still depreciate for the next 39 years, right? Isn\u2019t there still some leftover at 27 and a half?<\/p>\n

Matt:
Exactly. So let\u2019s take that example of the $400,000. $400,000. $100,000 is land. $200,000 is the building. $100,000 is the five and seven-year property. If you depreciate the five and seven-year property in year one, that\u2019s gone. Think of it as you\u2019re not going to get to depreciate any of that hundred grand anymore, but what are you left with? The $200,000 building that you just have to depreciate over 27 and a half. So let\u2019s say instead of 11 grand, if your accountant did it the wrong way, you\u2019d get $200,000, and you\u2019d still get 7,200 bucks as a deduction because that $200,000 for the building value, you\u2019re just taking it over a longer period of time. So remember the rule. Bonus depreciation is 20-year life or less. The building in a residential long-term is 27 and a half. Commercial, 39. So neither of those are you going to get to bonus, but the goal is to identify the small stuff, the electrical, paint, carpet, windows, all that.<\/p>\n

Rob:
That\u2019s crazy. So, really, you still get depreciation every year after. So is there any reason to not run a cost segregation report on your property?<\/p>\n

Matt:
Time, value of money, and all that would tell you no. That\u2019s what I\u2019m saying. If you\u2019re a landlord, short-term or long-term, or you\u2019re in the nature in the game of real estate, I would cost seg it because worst case scenario, you make a $50,000 W-2, you kick up two long-term rentals that you cost seg and somehow drive $100,000 loss. Even if you don\u2019t meet the rules to where like, hey, you have this W-2 for 50 grand and this $100,000 loss, and you can\u2019t net them and say, \u201cHey, IRS. I made no money on paper,\u201d you can still roll that loss forward, or you can sell rental property number two, and you take this huge loss you just got from year one, and net that against it. So there\u2019s still so many other ways. Just think of it as delayed gratification if you just can\u2019t use it that year.<\/p>\n

Rob:
Dang it.<\/p>\n

Matt:
So that\u2019s why I would still cost seg, and sorry, this is the last year to do a 100% bonus. When Trump passed that Tax Act, we got a 100% bonus depreciation. It was just a heyday for real estate investors. Now, this is the last year that we get a 100%, and it will phase down to 80% next year and continue to phase out 20% each year.<\/p>\n

Rob:
Yeah, yeah. Okay. So just so I\u2019m clear, and I want to make sure we understand the concept because then we\u2019re going to get into another thing here, but let\u2019s say I have a short-term rental, and let\u2019s say I\u2019d take $100,000 deduction from the cost segregation you talked about. Let\u2019s say that I have any rental I guess, and let\u2019s say I\u2019m making a $25,000 profit. Then, let\u2019s say that I have another business that\u2019s self-employment like of a 1099 employee of myself, right, and that\u2019s a $75,000 profit or gain. Would my deduction count towards both of those?<\/p>\n

Matt:
So think of it as the rentals could offset. So if you have a rental making 50 and a rental losing 50, it\u2019s likely there are circumstance that you can net them out and pay no tax on your rental income. If you want to start involving your business and saying, \u201cHey, I\u2019m going to buy real estate, and I\u2019m going to take these huge losses against my business income,\u201d that\u2019s where we\u2019re going to get into that because there\u2019s a few ways to do it, but there\u2019s a lot more check boxes to go that route, but for sure on the rental side where rental making money, rental losing money, and you can net those out.<\/p>\n

Rob:
Okay. Cool, cool. So I guess that gets us into another really big hot topic here in real estate in the forums, which is real estate pro status, and what are some of the qualifications here, and what are the benefits of being a real estate pro?<\/p>\n

Matt:
Yeah. Okay. So that\u2019s exactly what we\u2019ll go over. One thing I want people to think of real estate professional status as being as a designation or a badge that you get from the IRS. There are two rules that you have to follow to be a real estate professional, and they\u2019re not this or that. It\u2019s this and that. You have to meet both of them. The first test is 750 hours, personal service hours in a real property trader business, real estate.
There\u2019s nine of them, I\u2019ll read them quickly. Development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operations, management, leasing, and brokerage. Those are the types of businesses which if you\u2019re a realtor, if you\u2019re a flipper, a wholesaler, landlord, you will pass, but you have to have 750 hours in this business. Quick note there. If you\u2019re an employee, you have to own at least 5% of the business for those hours to count, but the first test, 750 hours.
We have a lot of clients that are like, \u201cGreat, I\u2019m a real estate pro. I\u2019ve hit 750,\u201d but they forget about test number two, which is more than one half of your total work time has to be in a real property trader business or in real estate, and that is where most people fail. They\u2019ll be a manager at a department store. They\u2019ll be a doctor, a dentist, whatever. That\u2019s why what we see is one spouse will\u2026 Let\u2019s say they\u2019re a money-maker. They\u2019re a dentist. They\u2019re making a ton of money.
Their spouse will now go out, maybe be a realtor, start flipping, run their portfolio, and they will earn this real estate professional status because let me tell you now, from my understanding, there\u2019s been one court case where somebody argued that they were a full-time employee somewhere, yet still a real estate pro, and it\u2019s because it\u2019s very hard. If you\u2019re working full-time, how are you going to argue to the IRS that you work 4,000 hours a year and more than one half in real estate while you maintain a W-2 job? So those are the two rules, 750 hours, and then more than one half of your total work time to be a real estate pro.
So the reason why real estate professional status even matters. We have to look at rental real estate and business income of what you do day to day. They\u2019re separate. Rental real estate is considered passive, and business income is non-passive. There are a lot of rules with the IRS to merge the two. Being a real estate professional is one of those carve-outs where the IRS says, \u201cHey, if you have a lot of losses from real estate, rental real estate, and you are a real estate professional, you have the ability to take those losses. If you\u2019re not a real estate pro, basically, kiss it goodbye. Your only other option is the short-term rental loophole, which we\u2019ll go over after. So what we need to segue next into is being a real estate pro is great, and that gives you the ability to take these losses. But if you don\u2019t materially participate, being a real estate pro doesn\u2019t even matter.<\/p>\n

Rob:
Okay. So you mentioned something when you\u2019re breaking down real estate professional status, which is material participation. That\u2019s pretty important too. I know that there\u2019s a lot that goes into it, so can you quickly just break\u2026 Well, as quickly and whatever you need to do to get the point across, but what is material participation?<\/p>\n

Matt:
So, at the end of the day, the IRS wants to see if you\u2019re taking these losses from real estate. They want you involved. They want skin in the game. They want to see that you\u2019re managing or assisting managing the property. So material participation basically is\u2026 There are seven tests. In this case, you only have to meet one of them. There are three that most clients will meet, and so we\u2019ll cover those. So if you have a long-term rental, and you are a real estate pro, and now you need to meet material participation, this is how you would do it. The gold standard is 500 hours. If you spend 500 hours on that rental, they call it an activity, but a rental, then you would qualify as materially participating. That\u2019s hard. If you have one long-term rental, it\u2019s very unlikely you\u2019re going to hit 500 hours.
Test number two is a little bit easier where you have to hit 100 hours and more than anybody else. So you notice how if I hire a landscaper, a cleaner, or anybody like that, I now have to manage their time and see how much time they\u2019re spending because I have to hit at least 100 hours and more than them. Again, showing the IRS that I have skin in the game. I\u2019m doing the work. Test number three is a catchall, but it\u2019s a little bit sketchier, and it is basically substantially all. You\u2019re saying you did substantially all the work. The problem with that test is notice that the second you hire somebody to assist with the property, you\u2019re now held back to that test number two because now you have to track their time and make sure you\u2019re doing more than them.
So I say this as you have to think of real estate pro as the first hurdle jump over, and then materially participating as the second. You have to be a real estate pro. You have to materially participate to take that loss that you just got from that big cost segregation study. That\u2019s why I was saying even if you don\u2019t get to take the loss because, let\u2019s say, you\u2019re not a real estate pro or you failed material participation, it\u2019s okay. You\u2019ll get the loss later. But for you to maximize this and take these big losses that cost segs are giving you, you have to be a real estate pro, and you have to materially participate if you\u2019re going long-term.
We\u2019ll get into the next piece, which is short-term rentals, which is\u2026 There\u2019s a bit of a loophole there around this entire section that we just talked about, but everybody, every TikToker, every Instagrammer forgets or leaves out that piece, and that\u2019s the piece that I want people to remember is not only do I have to be a real estate pro, but I have to materially participate in these properties, or else the real estate professional means nothing.<\/p>\n

Rob:
Okay, and so if you materially participate and you\u2019re a real estate pro, at that point, you are able to take your depreciation losses against W-2 income or no?<\/p>\n

Matt:
Exactly. The best example. You have a spouse making $50,000 as a manager somewhere. You have the other spouse being a real estate agent, and you buy a property. They\u2019re a real estate pro because their day-to-day work is in real estate. You buy this property, you self-manage it, you do a cost segregation study, you get a little bit of rental income, you write off your mortgage interest, and you\u2019re basically at zero on your profit and loss. Then, you come in with this whopper depreciation expense of\u2026 Let\u2019s say it\u2019s 60 grand. You now would be able to take your W-2 of $50,000, take the $60,000 loss, and on paper, look like you lost $10,000. You\u2019re getting your entire refund back, and you\u2019re sitting pretty. You\u2019re going into year two with a $10,000 loss, but notice they had to be a real estate pro. They had to materially participate. But when they did, huge tax savings because now you basically made no money on paper when in reality, you took home at least 50 grand, and the property probably cash flowed.<\/p>\n

Rob:
Man. Okay. So, all right. Again, every time I talk to you, my mind melts, but this is where\u2026 This short-term rental loophole, this is a really popular thing. This is, really, a groundbreaking thing for people in the Airbnb space, short-term rental space. So tell us about that because this is where things start changing a little bit, right?<\/p>\n

Matt:
This is a wild one, and let me preface this with too. People don\u2019t like the term \u201cloophole.\u201d Don\u2019t care because this is truly a loophole. I don\u2019t think this is the IRS\u2019s intent with this. I do think this will go away, and here\u2019s why. Real estate professional status, and material participation, and basically, back to that example of you earning rental real estate, and taking losses, and trying to net them with your business income. You\u2019re held back by doing this because of Section 469 rules and the STR loophole. You are simply skirting the rules because in the definition of Section 469, it says these things are not rental activities with respect to these rules. So you think, \u201cOkay. Well, if I don\u2019t have something that\u2019s a rental activity, I don\u2019t have to abide by those rules,\u201d and how you\u2019re avoiding it is two main rules.
If you have a property where the average rental period is seven days or less, you are considered transient use property, not rental property. So, therefore, I get to avoid those rules. The next rule is I have a\u2026 so a client out here in Vegas. They just bought a high-rise condo, and they\u2019re held to doing mid-term rental. So they have to do 30 days. The rule for that is\u2026 so another one of those exceptions to this whole code section is if you have a property where it\u2019s equal to or less than 30 days on average being rented, that\u2019s okay too. That\u2019s not a rental property. But in that case, you have to have substantial services, which in that case is like daily turnover service, private chef, a vehicle for them to use. Something more along the lines of a bed and breakfast. This is not just a normal short-term rental now. This is a business.
So if you can meet those two, you\u2019ve now skirted the rules of 469, which was disallowing you to merge these things, your day-to-day business and your rental real estate, and now you\u2019re able to do that. The only kicker is what do you still have to do? You still have to materially participate. So, perfect example. Couple, they buy a short-term rental. It doesn\u2019t matter what they do for their day-to-day job because I don\u2019t need to be a real estate professional here. They get an Airbnb. The average rental period is six days. That\u2019s the average stay for a tenant. They manage the bookings. Right?
So, let\u2019s be honest. Back to those three tests of material participation, you\u2019re not going to want to clean it yourself. You\u2019re going to hire a cleaner. What happens if you hire somebody? You\u2019re held to doing 100 hours and more than everybody else. So what\u2019s going to happen? You\u2019re going to manage the bookings. You\u2019re going to walk it. You\u2019re going to post it online. You\u2019re going to do everything else, but clean the property. You\u2019re going to hit your 100 hours. You\u2019re going to let somebody else clean it. You\u2019re going to do a cost segregation study. You\u2019re going to drive a huge loss, and you\u2019re going to net it against your day-to-day income. That, at the end of the day, is what everybody in real estate should aim for because that\u2019s the holy grail. That\u2019s the Trumps, the Kiyosakis, the Grant Cardones, all of that of how you\u2019re netting these losses from your business against this or with this rental income. So the STR loophole is a great way to do it and like you said, is really catching a lot of attention now because it\u2019s so powerful.<\/p>\n

Rob:
So if I\u2019m understanding this correctly, just to break it down, let me make sure that I\u2019m picking up what you\u2019re putting down. So you can basically buy a short-term rental or an Airbnb of sorts. I guess in some instances, a mid-term rental, but I\u2019m just going to go with the short-term rental side of it. You can materially participate in that. You\u2019re working at least 100 hours on it and more than anyone else who\u2019s working on that property. If you do that, when you take a loss with the cost segregation, you can count that loss towards W-2 income as well, and the loophole is that in other scenarios like long-term rentals, you would have to be a real estate professional on top of materially participate. In this instance, you just have to materially participate. Is that right?<\/p>\n

Matt:
Exactly. I can avoid, right? So me as an accountant and a CPA, I can do this. I don\u2019t need to be a real estate professional. Prior to that, it was cool. Real estate is great. It appreciates. You cash flow. But if you want to really realize the tax benefits, you got to be a real estate pro. Now, this is simply a way to skirt those rules if you can still meet these new rules and still maximize your losses from real estate.<\/p>\n

David:
Matt, what are some other things people can do that would qualify for working on the property? So if you\u2019re doing research on other properties and what they\u2019re doing to generate revenue or stay booked, or if you\u2019re looking up information about how you could generate more per stay, or you\u2019re shopping for furniture for a couple hours, does all of that\u2026 Can those hours be counted towards the time you spent on the property?<\/p>\n

Matt:
That time does count. What I want people to watch out for is, is if you went to battle with the IRS, and they look at your time log. There\u2019s operational hours, we\u2019ll call it, which are the good stuff, like you said. Furnishing it, dealing with tenants, drafting the contracts, walking the property, those kind of things. Very managerial day-to-day ops. But then, there\u2019s like you mentioned researching other properties, \u201cI\u2019m checking the financials,\u201d \u201cI\u2019m collecting the rent,\u201d \u201cI\u2019m reconciling the bank account.\u201d Those are investor level hours or what could be considered education and research hours. If you sent a time log to the IRS, you wouldn\u2019t want the majority of those hours to look like educational or investor level hours. You want it to be property related. So there\u2019s no for sure answer of what allocation can be those hours, but I wouldn\u2019t have the bulk of them be that. But just as you said, there\u2019s a lot of different things you can do to earn those hours.<\/p>\n

Rob:
Yeah. So, David, I was going to ask you. You bought 15 short-term rentals this year. Is that just going to slice your tax bill for life?<\/p>\n

Matt:
That\u2019s nice.<\/p>\n

David:
No. Now, I\u2019m actually wondering because I wasn\u2019t thinking about this before. I had that property that covered last year\u2019s taxes and this year\u2019s taxes, but I\u2019m wondering if these ones could cover next year\u2019s taxes. So is there a way that I can build up depreciation in 2022 that is unused and could be applied towards 2023, Matt?<\/p>\n

Matt:
For sure. We just had a conversation with a client this morning that it\u2019s still rolling over depreciation. This will be his third year into 2023. So if you have a net operating loss, which is what you likely generated last year, that rolls forward with you, and if you generate another one in 2022, you will continue on with that. For sure. That\u2019s the game. That\u2019s the name of the game.<\/p>\n

David:
This depreciation is just like a superpower, right? When we\u2019re trying to figure out how to shield our income from real estate, this is almost exclusively. We\u2019re just looking for creative ways to take advantage of it. We call it a loophole. I hate that phrase.<\/p>\n

Matt:
I know.<\/p>\n

David:
I know what we mean when we say it, but it sounds shady. It\u2019s not shady.<\/p>\n

Matt:
Yeah.<\/p>\n

Rob:
Yeah.<\/p>\n

David:
The reality is if you owned a restaurant and bought a dishwasher, that dishwasher is going to break down. It\u2019s not going to run forever. You get to ride off the period of time because you got to buy new equipment for it. Right?<\/p>\n

Matt:
Mm-hmm.<\/p>\n

David:
Your rental property, even though it\u2019s a house or whatever, it does fall apart, and you got to spend money to paint it, and fix it, and the foundation will go out over time. The roof will go out over time. The cabinets will wear down. It is slowly falling apart. It\u2019s just got two things that nothing else has. One is you can leverage buying it much easier. You can borrow a bunch of money against it. Two, it tends to appreciate in value where your car doesn\u2019t. The dishwasher doesn\u2019t. Everything else you buy becomes worth less once you own it, but real estate, because of inflation, goes up, and you can borrow. You get this trifecta of leverage and appreciating value through inflation mixed with this depreciation factor, and bam, it\u2019s how the Trumps and the Kiyosakis, like you said, say they don\u2019t pay taxes. Now, it irritates me personally when they go up there and say, \u201cI don\u2019t pay taxes. I\u2019m not that dumb,\u201d because then it incites everyone to go want to get on this political rampage like, \u201cLet\u2019s get rid of depreciation so these greedy investors stop doing that.\u201d Right?<\/p>\n

Matt:
Mm-hmm.<\/p>\n

David:
If people hear everyone say, \u201cOh, there\u2019s a short-term rental loophole,\u201d it\u2019s very easy to say, \u201cLoophole? That\u2019s bad and not in my backyard.\u201d The next thing you know, you\u2019ve got a political wave of people that are going after short-term rental owners.<\/p>\n

Matt:
Yeah.<\/p>\n

David:
This is more of a way of qualifying as a real estate professional because they are recognizing this ish is hard work. Owning a short-term rental is not just buying an apartment complex, having someone manage it, and swimming in the dough. It\u2019s frustrating. Rob could sit here and tell you. He wears the same black shirt every day because he has no mental energy when he wakes up trying to deal with the complaints and the headaches of managing what accounts to be a very small hotel by yourself. Right? There\u2019s a reason why the tax code is written to benefit you. The key is, in my opinion at least, it stops you from looking at real estate like, \u201cShould I buy real estate, or should I make money at my job?\u201d<\/p>\n

Matt:
Oh, yeah.<\/p>\n

David:
It lets you do both. I can make money at my job that I can save if I buy real estate. Right? It creates this holistic approach to wealth building, which is what I think our industry needs. There\u2019s too much of this, \u201cTake a $100,000 course of mine, and I will teach you how to quit your job and just buy real estate.\u201d Right? It never works. There isn\u2019t a person I know\u2026 I know, Matt, you work with Ryan, I believe, and a lot of us know people that own real estate. All of them work a lot. We don\u2019t know people that are sitting on the beach doing nothing that bought real estate. Right?<\/p>\n

Matt:
Mm-hmm. Yeah, not really. No.<\/p>\n

David:
We\u2019re still lurking to earn money in different ways, but we\u2019re sheltering it in the real estate. Right? Let\u2019s not forget. There\u2019s a risk associated with buying estate. This is part of why you\u2019re compensated for these things because you could lose money in it. It\u2019s not like a W-2 job where you go to work, and you do a bad job, and your boss charges you 900 bucks for sitting in their office or at their desk all day. There\u2019s no downside to a W-2 job. There is to real estate. Now, we haven\u2019t seen much of a downside because the last 10 years, we\u2019ve been printing money like crazy. So everyone has done well, but it\u2019s not always like that. Right? You do hit circumstances where you can lose in real estate, and this is a form of shelter against some of those losses.<\/p>\n

Matt:
Yeah. For sure. Right. It\u2019s to the point of\u2026 So I get a lot of flack because, again, to that loophole method, and it\u2019s like you\u2019re still following the rules. When people like to talk about, \u201cOh, well, you\u2019re sort of one with the government, and you get these incentives because they\u2019re written by the government.\u201d What do they want you to do? Spur economic development. What are you doing by being an STR landlord? You\u2019re spurring economic development. Right? You\u2019re likely rehabbing a property and making it nicer for the area. You\u2019re generating income that will likely be taxed. So it\u2019s just like that\u2019s the benefit that they\u2019re giving you.<\/p>\n

David:
You\u2019re also ruining neighborhoods, driving up housing prices in my backyard. If you really, really go deep on this\u2026 I love your point, Matt. Let\u2019s take the property Rob and I bought in Scottsdale as example. Okay?<\/p>\n

Matt:
Mm.<\/p>\n

David:
We are employing house cleaners to go in there and make money that are going to have their income tax and provide revenue to the government. We are employing landscapers who have to go in there, and they have to do work, and we\u2019re generating revenue for them that will be taxed and will go to the government. We are paying money for utilities, for water, for energy, a lot of stuff. We have a pool service person that has to go in there. We\u2019re constantly buying new products like a $25,000 water heater that Rob really wants for this property that\u2019s going to be taxed, that\u2019s going to make money for some business that employs people that all pay money on that.
We have a handyman that have to go fix stuff all the time. Right? A person had to build that house in the first place that made money from it. The airlines that people fly in from to visit our property are making money and being taxed. The car that you rent at the airport or the Uber driver you take to get to there are all generating revenue, and they\u2019re all being taxed. So it\u2019s easy to say the real estate investor isn\u2019t having to pay tax, but like you said, they\u2019re generating more revenue for the government than what they are keeping and not having to pay the tax from the property.<\/p>\n

Matt:
Exactly. It\u2019s why you get the benefit for doing it is because you\u2019re spurring all of that development, and then just like you said, how many did you buy this year? Look at what you\u2019re doing across the board. I almost wish you could mind map that out and see how many other people and how much other income and tax you\u2019re generating by those assets even though you may not pay tax. Yeah.<\/p>\n

David:
Let\u2019s talk about the neighbors that don\u2019t like it for a second. Okay?<\/p>\n

Matt:
The Karens.<\/p>\n

David:
The Karens, right?<\/p>\n

Matt:
Yeah.<\/p>\n

David:
They all complain, \u201cI don\u2019t like that person making money with that house.\u201d All right. I bet you don\u2019t mind the value of your Scottsdale property quadrupling in the last six years, and there\u2019s a reason why. Those properties are worth more to an investor who runs it as a short-term rental, so they pay much more for the house, which now takes the comps and bumps it up for every house in the neighborhood. You know what happens when a house sells for more. The Scottsdale city and the state of Arizona get more money in property taxes because the basis doubles, and property taxes go up. Now, they have more money to fix roads, and put on events, and do all the stuff that everyone loves.
It\u2019s super shortsighted to just get angry at somebody who\u2019s making moves and to get upset. It makes that entire area worth so much more. Every one of those homeowners has six figures minimum to all of them with what their house is worth, and the same happens in a lot of different environments. A lot of different areas where short-term rentals have moved into there, you do get your stereotypical loud parties and crap, but in general, they make the area worth so much more. They increase the tax revenue for the area. The basis of all the properties goes up. The homeowners make more money. Now, they get equity lines of credit on that, and they go spend it on new stuff which now creates revenue for all the people that are selling them this stuff, which now pay income taxes on their W-2 income. When you look at the big picture, it makes so much more sense. It\u2019s often when we focus in on the one little thing that you get that negative Karen energy. Is there a name for that? NKE?<\/p>\n

Matt:
Bad vibe.<\/p>\n

Rob:
I think it\u2019s NKE.<\/p>\n

Matt:
Yeah.<\/p>\n

Rob:
I will say, dude, make sure that you have an editor cut that last one to two minutes and put that on TikTok, and you\u2019re going to go viral, man. That\u2019s all very true. This short-term rental loophole, whatever you want to call it. I mean, this is one of those things that I\u2019m a lot more unapologetic than I used to be, a younger, not as wise self. It\u2019s like people are always like, \u201cHow can you not pay taxes? What about the roads?\u201d And, \u201cHow dare you.\u201d I\u2019m like, \u201cLook, first of all, all the millionaires and billionaires are out there. They\u2019re using the tax code. I\u2019m not going to just be\u2026\u201d What is it? What is it? I\u2019m not going to be the guy that\u2019s like nice and being like, \u201cYou know what? It\u2019s wrong that they did that. Thus, I\u2019m going to mail in a check to the government because I\u2019m a nice guy.\u201d It\u2019s like, \u201cNo. I don\u2019t want to do that. I\u2019m going to use the tax code as it was written,\u201d and the tax code was written for real estate.<\/p>\n

Matt:
That\u2019s exactly it, and that\u2019s what always gets me, and I love to clap back at these people in the comments is I would love to sit across from an auditor and show them your tax returns, show them any of our clients\u2019 tax returns is because we are following the rules. We\u2019re not exploiting any rules, or I guess you could say exploiting if that\u2019s the word, but whatever. We are following the rules that they\u2019re writing. To your point too, when you look out at the macro, it\u2019s either you pay the tax, let\u2019s say, as an employee, and the money goes to the government. The government depends on where it spends the money.
The government is terrible at spending money. I would much rather have somebody go in and like you said, hire the cleaners. Maybe you buy a lot off somewhere else in the desert, and you got to build roads to get to it, bring utilities to it. So you spending that money your own way is likely still better than having the money go directly to the Fed, and then them spend it that way. So it\u2019s like you\u2019re going to get the economic development somewhere. I\u2019d rather have it go from the investor who\u2019s going to want to grow it into more. You know?<\/p>\n

Rob:
Yep, yep.<\/p>\n

Matt:
Any day, so.<\/p>\n

David:
Which is the same principle behind the 1031, right?<\/p>\n

Matt:
Yeah.<\/p>\n

David:
It\u2019s the same idea. You\u2019re not avoiding taxes. You are taking your gain and putting it into a bigger property that the government is going to get more money from later because you\u2019re better at using the money efficiently than any\u2026 the government isn\u2019t going to do and stuff. I\u2019m not trying to be negative, but look at your experience with the TSA versus if you go to Clear. Okay? Do you ever go to the DMV and walk out like, \u201cI\u2019m going on Yelp and give it a great review because this DMV experience, they were so good?\u201d It\u2019s just that\u2019s the way it works. They\u2019re not incentivized. It\u2019s not a capitalistic endeavor. So anytime you can take people that are good at doing something and put the power in their hands, it\u2019s going to be better for everybody than when you rely on the government. It\u2019s like opportunity zones. Same idea, right?<\/p>\n

Matt:
Mm-hmm.<\/p>\n

David:
Investors do a much better job developing an area that\u2019s been hurting by pouring money into it in a prudent way than the government going in and building public housing, and then ignoring it, and it turns into a crime-ridden area that\u2019s been ignored, and none of them know how to fix it. I like painting the tax code in the appropriate light, which is they\u2019re wanting to incentivize this behavior. They want the brightest and the best minds in business that are good to develop real estate because people need housing, and the more that houses are worth, the more taxes it makes for the area. All those people that are not real estate investors benefit when their area generates more property taxes, and it can get poured back into the schools and everything else that\u2019s benefited. Don\u2019t take the shortsighted approach that you\u2019re going to see in YouTube comments or Instagram hate where they\u2019re like, \u201cGreedy landlords are ruining this for everyone.\u201d It\u2019s usually the opposite.<\/p>\n

Matt:
Think about it. They want you to grow as an individual. You could be a W-2 employee, right? When I say they, the IRS or the government in this case for the tax code. You could sit on the couch, be a W-2 employee, and you\u2019re going to pay tax on your W-2. You go stand outside, and hold a sign, and start selling lemonade for a dollar, you\u2019re a business owner and can take deductions. Why? Because now you\u2019re in the pursuit of income, and you\u2019re going to now start spending money in other ways that are going to drive economic development. If you\u2019re going to just be an employee, and retain money, and spend it on goods and services that you\u2019re going to use personally, great. There\u2019s room for that. We need that. But if you\u2019re going to go out there and spur development, you\u2019re incentivized, and so you get to take those deductions.<\/p>\n

David:
What happens if you buy a primary residence, you live in it for a period of time, you move out, you turn it into a short-term rental?<\/p>\n

Matt:
You can cost seg it. You can take the loss. You can do all of that, and potentially, when you end up selling it, because we all know if you sell your primary residence and you\u2019ve lived in it two out of the last five years, you get huge tax advantages. So even if you, let\u2019s say, lived in it for 10 years, you have it be a short-term rental for a year or two, you don\u2019t like it, you sell it, you still may get to bite off a piece of that tax benefit just not as much, but totally fine. It\u2019s a great strategy.<\/p>\n

David:
So you live in it for two years, then you rent it out for three or so as a short-term rental, you get all the tax benefits of the short-term rental, then you sell it at the end of that, and some of that gain would be sheltered by the two years that you lived in it as a primary residence? Totally legal, totally intelligent. You don\u2019t have to go put a massive amount down to get into the short-term rental game. You can go put an FHA loan on a primary residence, live in it for a period of time, rent it out. You can take advantage of everything we\u2019re talking about without needing to be a multimillionaire with 400 grand to go drop on a Scottsdale property.<\/p>\n

Rob:
Mm-hmm, like 500, but that\u2019s neither here nor there. Plus, another 200. Ah, that\u2019s not the fucking price.<\/p>\n

David:
[inaudible 00:56:57]?<\/p>\n

Rob:
We\u2019re going to make it. We\u2019re going to make it back. Okay. I do actually want to say before we wrap up today that one thing for people to keep in mind\u2026 There\u2019s already some angry man or angry lady that\u2019s already left a comment in the comment saying, \u201cOh, how dare you not talking about recapture tax.\u201d So all of this obviously is riding on the fact that you don\u2019t sell the property because if you cost seg and you take the loss on your taxes, you can\u2019t\u2026 don\u2019t think you\u2019re going to get smart, and then sell the property, and then use that money to go buy another one, and do it again. You\u2019ll have to pay back a recapture tax, right, Matt? Can you explain that briefly, or did I do it? Did I do a good job?<\/p>\n

Matt:
Yeah. Basically, yeah. So if you take depreciation, the government is giving you the expense now, and so later, when you sell that asset, you will have to pay some recapture. But for those of you that are like, \u201cWell, why would I even take it then?\u201d One, you have to because if you end up selling the asset, the IRS is going to make you calculate it as if you took depreciation even if you didn\u2019t. So you\u2019re still going to have to pay recapture. So that\u2019s where, always upfront, you\u2019re going to take the depreciation when you can, but you nailed it. You\u2019re going to have to pay some recapture.<\/p>\n

Rob:
Yeah. Is the recapture just proportional to basically the years that you owned it?<\/p>\n

Matt:
Kind of. So it goes back to those buckets of property because there\u2019s different recapture rates. So, for example, on the building, that\u2019s a 25% recapture. So if you took $100,000 in depreciation, $25,000 is going to be depreciation recapture. On the smaller assets like the windows, carpet, all that, five and seven-year property, that\u2019s ordinary recapture. So whatever your tax rate is, wherever you fall in the bracket, but\u2026<\/p>\n

Rob:
Okay. Cool.<\/p>\n

Matt:
You will have to pay recapture, but that\u2019s where, to what David was saying, if you continuously purchase real estate, you shouldn\u2019t have to worry about it. The example I like to use is Grant Cardone and the jet. He buys a $90 million jet, sells it, has a huge gain because of this recapture. What does he do? Go buy another jet. What are you going to do if you\u2019re a landlord? Buy another property or 1031.<\/p>\n

David:
That is an important point to highlight because it\u2019s not\u2026 Like I was saying, it\u2019s not a free loophole. There\u2019s risk associated with buying real estate, and the other thing, when you get into the strategy, like we are, it hits you, \u201cOh, I can never stop.\u201d You\u2019ve heard the phrase \u201cto grab a wolf by the ears?\u201d You familiar with that, Matt?<\/p>\n

Matt:
I\u2019ve heard that, but now I want to see exactly how that\u2026<\/p>\n

David:
No one knows what it means, but we have all heard it. Right?<\/p>\n

Matt:
No, I\u2019ve heard that though, but yeah.<\/p>\n

Rob:
Good. Can I take a guess really fast?<\/p>\n

David:
I\u2019d love this.<\/p>\n

Rob:
Okay. So it\u2019s like you grab a wolf by the ear before it bites you, and then you\u2019ve got to\u2026 It can no longer bite you because you\u2019re holding it by the ears. But if you let go, it\u2019s going to bite you.<\/p>\n

David:
Yeah. You could never let go, but it can never hurt you. It\u2019s a stalemate that you\u2019re locked in and by the ears. You\u2019ve got both ears, so he can\u2019t bite you, but you can\u2019t let go. Right?<\/p>\n

Matt:
Yeah. That\u2019s a good one.<\/p>\n

Rob:
Well, to be fair, I didn\u2019t get that. As I explained it, I was like, \u201cI think I\u2019m getting it. I think I\u2019m getting it.\u201d<\/p>\n

Matt:
He\u2019s formulating it as he\u2026<\/p>\n

David:
That\u2019s so funny.<\/p>\n

Matt:
I was like, \u201cHe\u2019s so smart.\u201d Yeah. That\u2019s good though. That\u2019s good.<\/p>\n

Rob:
You\u2019re right. I totally see the correlation here. For sure.<\/p>\n

David:
It\u2019s that Michael Scott quote, \u201cSometimes I just start a sentence and hope I find my way as I go.\u201d That\u2019s what Rob did. Yeah. You got to understand. As you\u2019re making money, because you\u2019re taking all the depreciation that\u2019s normally over 27 and a half years or I believe 38 years for a property\u2026<\/p>\n

Matt:
39.<\/p>\n

David:
39? Okay.<\/p>\n

Matt:
Yeah.<\/p>\n

David:
You\u2019re crunching it into the beginning, so it\u2019s not free. Right? At some point now, that income is very difficult to shelter because you\u2019ve used it all up. So if you stopped buying more real estate, then you would be taxed higher on the revenue that\u2019s coming in because you took it upfront. It\u2019s not free, and if I keep making money, but I stop buying real estate, I\u2019m getting taxed on it. So what I like about the strategy frankly is it forces me to always be buying real estate.
If I ever got cocky and was like, \u201cYou know what? I just want to buy a couple Lamborghinis. I want to get my Andrew Tate on. I want everyone to call me The Top Greene, The Top G, and I want to look like a big shot,\u201d I would be getting taxed terribly on the income that\u2019s coming in. It forces me to keep and delay gratification. I got to keep buying real estate. I got to keep delaying gratification. I have to keep running my finances from a more wise position of living off of the cash flow that the assets produce as opposed to the temptation to live off the cash flow that my business may produce.
I think it\u2019s smart. It\u2019s one of the reasons I recommend this to everybody because it\u2019s\u2026 The biggest fear with getting in shape is you\u2019re going to fall out of shape. It\u2019s very hard to stay constantly eating good and constantly working out. This is a way that you stay in financial shape. You can\u2019t get off the treadmill ever. You are committing for as long as you make money to investing in real estate and managing that, and you\u2019re going to have to ride some of the down times too. So what you often find, at least what I\u2019ve found, is the money I\u2019m putting down on the property is very close to the money I\u2019m saving in taxes. It almost ends up being the same. Okay?<\/p>\n

Matt:
Yeah.<\/p>\n

David:
So I don\u2019t really ever have a ton of money left over to go spend. The majority of my income has to get reinvested into the real estate. So it\u2019s like this perfect\u2026 In so many ways, it\u2019s just a better way to live, and that\u2019s why we\u2019re here to talk about it.<\/p>\n

Rob:
Boom.<\/p>\n

Matt:
What you would think too, at that point, the government probably thought that through, like you had mentioned, where they\u2019re forcing you to do it over and over is because these benefits that you\u2019re getting are temporary. It\u2019s not a one-and-done. You got to keep doing this stuff, so.<\/p>\n

David:
That\u2019s why it\u2019s not a loophole. It\u2019s why, and we all understand that, but that\u2019s why it\u2019s not fair to classify it that way because it\u2019s like saying working out is a loophole.<\/p>\n

Matt:
I\u2019m coming from the\u2026 which is really good because you\u2019re right. It\u2019s not a loophole because I think if you\u2019re following the tax code, it\u2019s legal, and it\u2019s purely not a loophole. I think loophole is you\u2019re skirting some rule and not following it.<\/p>\n

David:
That\u2019s how it sounds. Yes.<\/p>\n

Matt:
Yeah, and so my context of it being a loophole is I think that there will be new rules that will not allow this because they see, \u201cOh, crap. Our rules didn\u2019t cover this. So now, we need new rules.\u201d<\/p>\n

David:
That\u2019s why we\u2019re telling people to take advantage now.<\/p>\n

Rob:
For the sake of the clickbait title and the thumbnail, we\u2019re going to call it the short-term rental loophole. But if you listened all the way through to the end, you know it\u2019s just a tax rule, and that\u2019s all.<\/p>\n

Matt:
Yeah.<\/p>\n

Rob:
We did it, guys. This was fun. This was a good deep dive. Both educational, little spicy at the end, and then a good, just little like, \u201cHere\u2019s good perspective for you moving on.\u201d<\/p>\n

David:
Matt\u2019s got the CPA thing going on that are typically the most difficult people ever to communicate with. I know everyone listening to this is like, \u201cYou got to ask your CPA the same question seven times to finally try to get some idea of what they\u2019re trying to explain because they use big CPA words,\u201d but you can communicate with everybody. You\u2019re like that perfect hybrid that\u2019s meant to bring the two worlds together.<\/p>\n

Rob:
Dude, I\u2019ve been telling you this, David. I\u2019m like, \u201cYou got to get with my guy, Matt Bontrager.\u201d I talk about you all the time, Matt, because, I\u2019m telling you, there are very little CPAs that can talk passionately and be charismatic at this tax stuff, so thank you.<\/p>\n

Matt:
I\u2019ll never forget. I was at a bowling event after school just about to graduate with my accounting degree, and I met this guy, and he was like, \u201cYou\u2019re going to be a CPA?\u201d I was like, \u201cYeah.\u201d He\u2019s like, \u201cYou don\u2019t seem like an accountant.\u201d I was like, \u201cWell, that must be pretty good,\u201d because that\u2019s it though, and that\u2019s why I was saying advisors and tax preparers are way different. Preparers are a little more nerdy in the background. An advisor has to be really smart and know their stuff, but be able to communicate.<\/p>\n

David:
Yes.<\/p>\n

Matt:
So that\u2019s where, in a tax world, that\u2019s so hard to find.<\/p>\n

Rob:
Well, geez, pat yourself on the back more, Matt. Dang. No, I\u2019m just kidding. Well, awesome.<\/p>\n

Matt:
For now, I\u2019ll do that. Thank you so much.<\/p>\n

Rob:
Well, Matt, if people want to find out more about what you do and where they can learn more about your services, where can people find you on the internet?<\/p>\n

Matt:
Yeah. So, the best way, I\u2019m even still\u2026 I\u2019m not big. I\u2019m in my DM. So I respond on Instagram, @mattbontrager. I got my handle, just my name. Then, if you want to work with us, our website is the best way. Submit your info there. We\u2019ll reach out because that\u2019s where\u2026<\/p>\n

Rob:
Which is?<\/p>\n

Matt:
Oh, yeah. Sorry. That would help truebookscpa.com.<\/p>\n

Rob:
Okay. Cool.<\/p>\n

Matt:
Yeah. So through the website or through Instagram. Both ways.<\/p>\n

Rob:
Or you could buy truebooks.com. I looked it up for you. It was like a million dollars.<\/p>\n

Matt:
Oh, definitely. Yeah.<\/p>\n

Rob:
Yeah.<\/p>\n

Matt:
They\u2019re trying to get us there.<\/p>\n

Rob:
David, what about you, man? Where can people find out more about you on the interweb?<\/p>\n

David:
Check me out, @davidgreene24, on LinkedIn, Instagram, pretty much everywhere. Now, it\u2019s a YouTube handle, so you can follow me there, and let me know what you think about what I\u2019m posting. How about you, Rob?<\/p>\n

Rob:
You can find me, @robuilt, on Instagram, Robuilt on YouTube. YouTube is the main one, and then Robuilt on TikTok. Also, if you like this, if you learned something in the tax world, and this has got you fired up, pay it forward to the BiggerPockets Network by leaving us a five-star review on the Apple Podcasts platform. It really means the world to us. It helps us in the algorithm. It helps us get served to so many new people, and hopefully, help change lives and help people get started in this real estate thing. Final plug here, Matt. Just go follow Matt on Instagram, @mattbontrager. You\u2019ve been posting a lot of good reels. You\u2019ve been blowing up on Instagram. You make taxes very approachable on Instagram, so go give him a follow, and that\u2019s it. That\u2019s it. Mic drop over here. I\u2019m done.<\/p>\n

David:
All right. Thanks for your time, Matt.<\/p>\n

Matt:
Thank you, guys. That was awesome. Thank you so much.<\/p>\n

David:
This is David Greene for Rob, the sworn enemy of negative care and energy, Abasolo signing off.<\/p>\n

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Non-investors hate real estate tax loopholes. It always seems like the wealthiest landlords, apartment owners, or short-term rental hosts walk away with not only massive income but little-to-no tax bills at the end of the year. Are investors unethically avoiding taxes OR are they carefully, quietly using the tax code to build wealth and bring […]<\/p>\n","protected":false},"author":5,"featured_media":4310,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/REP_689_WEB.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-4309","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4309","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=4309"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4309\/revisions"}],"predecessor-version":[{"id":4311,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4309\/revisions\/4311"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/4310"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=4309"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=4309"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=4309"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}