Many of our clients ask before making their investment about the tax advantages when investing passively in a multifamily, there are very attractive points that apply when investing in Multifamily.
DEPRECIATION is the amount that can be deducted from revenue each year as a depreciable item at the apartment community age. The depreciation amount is such that a passive investor will not pay taxes on their monthly quarterly.
COST SEGREGATION is a strategic tax planning tool that allows companies and individuals who have built, purchased, expanded or remodeled any type of property, increasing cash flow by accelerating depreciation deductions and deferring income taxes.
CAPITAL GAINS: When the asset is sold and the partnership is terminated, the initial capital and profits are distributed to the passive investors. The IRS ranks the profit portion as long as long-term capital gain.
Taxable income (individual or joint)
$0 to $77,220: 0% capital gains tax
$77,221 to $479,000: 15% capital gains tax
More than $479,000: 20% capital gains tax
DEPRECIATION RECAPTURE is the gain received from the sale of depreciable capital property that must be reported as income. Depreciation recapture is evaluated when the sales price of an asset exceeds the tax basis or adjusted cost basis. The difference between these figures is “recaptured” when reporting them as income.
The appeal of real estate as an investment remains in time as the business that has made more money than all the industrial investments combined, and the tax advantages offered by Multifamily are the most interesting on the market.