All CPAs are not created equal. And if you’re working with an accountant who doesn’t understand real estate tax strategy, you may be leaving tens of thousands of dollars on the table.
Thomas Castelli, CPA, CFP, is Partner at Hall CPA, an entrepreneurial accounting firm that helps real estate investors minimize tax and maximize profit.
Out of college, Thomas landed a ‘dream job’ at a traditional accounting firm but soon realized he wasn’t on the path to the lifestyle he wanted. To achieve financial freedom, he built a portfolio of passive investments in apartment buildings before participating in his first deal as an active partner.
On this episode of Financial Freedom with Real Estate Investing, Thomas joins Garrett and me to discuss why he chose to put his money in multifamily over other investments.
Thomas offers a high-level overview of how the taxation of real estate works, explaining who benefits from bonus depreciation and why we can report a loss despite earning substantial cashflow.
Listen in for Thomas’ top strategies for deferring capital gains and find out why tax planning is so important for real estate investors!
How The Richest Man in Babylon influenced Thomas
- Served as foundation of personal finance journey
- Pay yourself first, save enough to invest in real estate
Why Thomas was unhappy working a traditional 9-to-5
- Not on path to where he wanted to be in 10 years
- Trade time for money vs. freedom to grow income
Why Thomas chose multifamily over other investments
- Multiple profit centers
- Tax benefits
- Positive cashflow
An overview of how the taxation of real estate works
- Value of building depreciates each year (on paper)
- Report loss despite earnings from cashflow
Who benefits from bonus depreciation
- Passive losses offset passive income or gains on sale
- Real estate professional’s losses offset active income
Thomas’ top tax strategies to offset capital gains
- 1031 exchange
- Form 8582
- Invest in new property in same calendar year
Why tax planning is important for real estate investors
- Specific actions throughout year get better results
- Take advantage of all tax breaks available to you
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