As the year draws to a close, multifamily investors have a limited window to implement tax-saving strategies. In a recent discussion, Harland and I highlighted three key actions to consider before December 31:
One. Invest in Syndications Offering Bonus Depreciation:
Participating in real estate syndications that provide bonus depreciation can significantly reduce taxable income for the current year.. For many investors the depreciation can help reduce the amount of income that is taxable from other sources.
Note: We have recently found an investment opportunity with 100% depreciation available in 2024, for accredited investors only, a 506(c) offering. Get in touch if you would like to learn more.
Two. Convert Old 401(k)s to Self-Directed IRAs:
Rolling over previous employer-sponsored 401(k) plans into self-directed IRAs grants investors greater control, allowing for diversification into real estate assets. Most employer-sponsored plans have a limited number of options available.
Self-direction using certain custodians allows you to invest in non-traditional assets such as real estate. By taking control of your investment you are able to move your funds from Wall Street to Main Street, where you can see the impact of your investment in local communities.
Three. Convert Traditional Accounts to Roth Accounts:
Converting traditional retirement accounts to Roth accounts now can lead to tax-free withdrawals in retirement, potentially offering substantial long-term tax benefits. Would you like to save even more? If the Traditional retirement account funds are invested in a property then it can be possible to pay lower taxes on a Roth conversion.
Implementing these strategies requires prompt action and consultation with financial advisors to ensure compliance and optimal outcomes.
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Mike is a retired aerospace engineer with a passion for real estate investing and teaching financial literacy. He lives with his wife in Daytona Beach, Florida.
