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Things you just don't get - Page 1577

post #23641 of 24065
Quote:
Originally Posted by ethanm View Post
 
Quote:
Originally Posted by Numbernine View Post
 

I blame all you little shits for everything.

 

You're welcome for basically everything being better now. 

 

Did you have a woobie in your day? Even they have been improved by us. I know I know how to improve on perfect? 

I doubt any improvements could stand up to monsoon in the Annamese Cordillera

post #23642 of 24065
Quote:
Originally Posted by otc View Post

I don't know enough about the kind of taxes Trump is filing...

I think it's actually a lot simpler than people are making it out to be. If you qualify as a "real estate professional" under IRS rules, you are not subject to passive loss limitations. This means that unlike a typical small-time real estate investor who does it on the side you can use passive losses to offset active income, meaning big real estate developers can use losses from their real estate investments to offset (or shelter, if you will) other income, like say ordinary income earned from appearing on a reality TV show, serving as the CEO of a publicly traded corporation or licensing your name to a fraudulent for-profit edumucator. Depreciation is one of the primary sources of (non-cash but recognized for tax purposes) losses for real estate investors reducing any taxes they would have to pay on cash-flow positive investments.

Oh, and let's not forget that some people want to abolish the estate tax which would compound this issue because when a wealthy land baron dies all of those depreciated real estate assets would step up to fair market value and the scion would go on depreciating them all over again ensuring they likely never have to pay any taxes.

So long story short real estate professional + depreciation + no estate tax + stepped up basis = wealthy real estate developers don't ever pay taxes.

BTW, I am not a tax advisor and none of this constitutes tax advice. For more information refer to publication 925 and/or the internal revenue code.
post #23643 of 24065
Quote:
Originally Posted by UnFacconable View Post


I think it's actually a lot simpler than people are making it out to be. If you qualify as a "real estate professional" under IRS rules, you are not subject to passive loss limitations. This means that unlike a typical small-time real estate investor who does it on the side you can use passive losses to offset active income, meaning big real estate developers can use losses from their real estate investments to offset (or shelter, if you will) other income, like say ordinary income earned from appearing on a reality TV show, serving as the CEO of a publicly traded corporation or licensing your name to a fraudulent for-profit edumucator. Depreciation is one of the primary sources of (non-cash but recognized for tax purposes) losses for real estate investors reducing any taxes they would have to pay on cash-flow positive investments.

Oh, and let's not forget that some people want to abolish the estate tax which would compound this issue because when a wealthy land baron dies all of those depreciated real estate assets would step up to fair market value and the scion would go on depreciating them all over again ensuring they likely never have to pay any taxes.

So long story short real estate professional + depreciation + no estate tax + stepped up basis = wealthy real estate developers don't ever pay taxes.

BTW, I am not a tax advisor and none of this constitutes tax advice. For more information refer to publication 925 and/or the internal revenue code.

 

Ignoring the estate tax issue, how does one take depreciation on their taxes but then not pay huge taxes when they sell the property?  Do they just never sell it?  What about once it is fully depreciated (I assume it is typically a 30 year straight line for most RE)?

 

Even to a crazy libertarian who thinks all taxation is theft, the situation you describe with estate tax seems pretty bullshit.


Finally, how do I become a "real estate professional" to get me some of that sweet, sweet passive loss deduction?

post #23644 of 24065
Quote:
Originally Posted by brokencycle View Post

Ignoring the estate tax issue, how does one take depreciation on their taxes but then not pay huge taxes when they sell the property?  Do they just never sell it?  What about once it is fully depreciated (I assume it is typically a 30 year straight line for most RE)?

Even to a crazy libertarian who thinks all taxation is theft, the situation you describe with estate tax seems pretty bullshit.


Finally, how do I become a "real estate professional" to get me some of that sweet, sweet passive loss deduction?

If a person holds on to a depreciated property until the person dies, that property gets a stepped up basis--the basis becomes equal to the full FMV of the property as of the date of death. So then the person's heirs could sell the property for full FMV and not pay capital gains tax on the sale.

The flip side, currently, is that property over a certain value in a person's estate ($5.45MM) is hit with the estate tax. So right now, at least, the feds give with one hand (stepped up basis) but take with the other (estate tax on larger estates). If the estate tax were to be abolished but the stepped up basis retained, then people could take full depreciation for the rest of their lives, then pass those assets down with a shiny new FMV basis and no tax liability. Of course, if the person chooses to depreciate and then sell during the person's lifetime, then there might be a recognition of gain (and tax due).

Since 99.7 percent of estates are worth less than $5.45MM, the truth for almost all people is that their estates get a full stepped up basis and pass down with no estate tax (or other tax burden) to their heirs.
post #23645 of 24065
Quote:
Originally Posted by VaderDave View Post


If a person holds on to a depreciated property until the person dies, that property gets a stepped up basis--the basis becomes equal to the full FMV of the property as of the date of death. So then the person's heirs could sell the property for full FMV and not pay capital gains tax on the sale.

The flip side, currently, is that property over a certain value in a person's estate ($5.45MM) is hit with the estate tax. So right now, at least, the feds give with one hand (stepped up basis) but take with the other (estate tax on larger estates). If the estate tax were to be abolished but the stepped up basis retained, then people could take full depreciation for the rest of their lives, then pass those assets down with a shiny new FMV basis and no tax liability. Of course, if the person chooses to depreciate and then sell during the person's lifetime, then there might be a recognition of gain (and tax due).

Since 99.7 percent of estates are worth less than $5.45MM, the truth for almost all people is that their estates get a full stepped up basis and pass down with no estate tax (or other tax burden) to their heirs.

 

That was my question.  If I have property that I depreciate and then I sell it for more than the depreciated value, I would have to pay gains on that.  That's what I thought, but I had to check with the experts.

post #23646 of 24065
Quote:
Originally Posted by brokencycle View Post

That was my question.  If I have property that I depreciate and then I sell it for more than the depreciated value, I would have to pay gains on that.  That's what I thought, but I had to check with the experts.

Yup. I had to post two pounds of fluff to cushion my short answer. biggrin.gif

A lot of real estate folks will defer capital gains by doing 1031 exchanges of property, but that's a whole other subject.
post #23647 of 24065
Wasn't there also some huge benefit from donating large easements along golf courses?

UnF, did not realize that part about being classified such that one can actually use passive loss without selling. Good info.
post #23648 of 24065
Keith Hernandez and Walt Frazier think they got the right to watch a man make love to his wife just because they hooked him up with beard de-graying formula I'm sorry but give me a break that is rediculous.
post #23649 of 24065
Quote:
Originally Posted by Piobaire View Post

Wasn't there also some huge benefit from donating large easements along golf courses?

.
You could well be right; I have no specific knowledge beyond the fact that at the course Trump built in the town where I grew up one of the holes crumbled and fell into the ocean. But for what it's worth (and this wouldn't necessarily be inconsistent with what you suggest) I think granting easements would often be a trade-off for getting zoning and land use authorizations necessary to the project's development.
post #23650 of 24065
Quote:
Originally Posted by VaderDave View Post

Yup. I had to post two pounds of fluff to cushion my short answer. biggrin.gif

A lot of real estate folks will defer capital gains by doing 1031 exchanges of property, but that's a whole other subject.

Well, you all get paid by the pound, right?
post #23651 of 24065
Quote:
Originally Posted by brokencycle View Post

Well, you all get paid by the pound, right?

Pretty much. That's why we use such heavy, fancy paper.
post #23652 of 24065
Some idiot was about to change lanes into me today. I honked and he flipped me off.

A while ago, I turned a corner in a parking garage and some dude was driving down the center. I actually have some spatial awareness when I drive, so I knew I could make the turn. Dude goes "really?" to me as I pass him.

I've noticed that people really like to drive straight down the center in parking garages and cut corners around blind turns.
post #23653 of 24065

And they usually have shitty cars so they dont even care if they get hit

post #23654 of 24065
All around this nation you got quote on quote "fine restaurants" serving toast that is a dark brown hue rather than light brown hue. Today I complained about it I said "Hey if toast were suppose to be dark brown hue it would be named char instead of toast think about it!" Manager said "Okay then the food on your plate is now called char are you happy?" I was like "No."
post #23655 of 24065
Quote:
Originally Posted by L'Incandescent View Post

All around this nation you got quote on quote "fine restaurants" serving toast that is a dark brown hue rather than light brown hue. Today I complained about it I said "Hey if toast were suppose to be dark brown hue it would be named char instead of toast think about it!" Manager said "Okay then the food on your plate is now called char are you happy?" I was like "No."

Did you have a plate of dry white toast?

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