How to Use Rental Losses to OFFSET W2 Taxes! [Part 1]

[@NikolasMartine01]

Tax laws can be so complex, and it’s super helpful to break them down like this. Understanding how different policies can impact our finances is crucial for making informed decisions.

[@OscarBarnaby3k]

Making profitable investments during this time of political change can be risky without that insight. For me, working with an adviser is the best first step to navigate these complexities and make informed choices.

[@TeddyAlexanderv6]

I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.

[@GraceOliviaf7y]

Hmmm this is quite interesting, Please can you leave the info of your investment advisor here? I’m in dire need for one.

[@TeddyAlexanderv6]

Nicole Anastasia Plumlee can't divulge much. Most likely, the internet should have her basic info, you can research if you like.

[@GraceOliviaf7y]

I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get.

[@ryanwilliams989]

The utilization of after-tax money and tax-free growth makes opening a Roth IRA very advantageous. Through a careful guidance of my FA, I did not pay taxes on my withdrawals of $2.86 million when I retired.

[@StellaMaris-lv2uq]

I don't regret the numerous financial mistakes I've made in the past since I've learnt from them. But the biggest one was planning my finances without consulting with a licensed financial counsel.

[@maryHenokNft]

Indeed, I did make use of a financial counselor. As I get closer to retirement, their advice has been really helpful. I thought compound interest on index funds wouldn't be sufficient because I started late. It's amusing how I've done better than colleagues who have more years of investment experience. I've profited more than $886k tax free.

[@maggysterling33254]

@@maryHenokNft I appreciate the implementation of ideas and strategies that result to unmeasurable progress. Being heavily liquid, I'd rather not reinvent the wheel, thus the search for a reputable advisor, mind sharing info of this person guiding you please?

[@maryHenokNft]

She's known as *Gertrude Margaret Quinto* One of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.

[@BiancaSherly-qt6sb]

Thanks for the advice. The search for your coach was simple. I investigated her well before using her services. Considering her résumé, she appears competent.

[@ElliottJMiller]

One of the best moves I ever made in my life. Filed taxes this year and was amazed. I’m hooked. Thank you KD. I looked at an in-depth older video of yours end of last year or beginning of this year about this same topic. And an older video on the tax savings on the different business structures. The laws of the universe and attraction are making my goals inevitable.

[@hipzwhitetower7413]

does looking for a property count towards the 750 hours needed to offset taxes on your w2/1099 before buying the rental property??

[@HisStolenIdentity]

I ❤ the way you teach! Specifically, you break the tax laws down for easy assimilation. You also provide overviews and takeaways of the video. Thanks Karlton!

[@jeffreyjoseph37]

It’s crazy how many Tax pros don’t know the information he put out in this video.

[@dannykalman]

WOW what an education. I’m sold. THANK YOU for your service. I had been wondering for years how to actually use real estate properly for offsetting taxes. Nobody had ever explained or even mentioned any of these topics to me. Wouldn’t have even known what to ask Google. Planning to do this immediately. Thank you!

[@dantawright1686]

Great wealth of knowledge. Your explanation skills of this knowledge are on point. Bought an old home in MD for $235k, received 4 lots on one deed with their own tax base. I rebuilt the original home with $200k construction loan and $130k in credit cards. I lived on lot #2 until the rebuild was done and renovated lot #2 as well. Now, I rent lot #2 but it came as one of the gifted lots. I build a work space on the back side of the rebuild to work from. The other two lots are .5 per acre land. I am a self-employed person working from a dedicated space of my home. I did not know I could depreciate my work space (34.23 %) of home. 2021, rented a section of rebuild home (10%) to a friend after closing down my business for six months. trying to understand cost basis to apply depreciation to my home, business and how to file 3115 form for lot #2, I dropped depreciation 1.5 years I had no tenant??

[@TJ-th9hw]

Karlton- I learn a lot from your content . Thanks so much! Please keep dropping GEMs to the community.

[@videosabia]

Hi, you’re so right; setting up the rental investment right - from a tax angle - at the beginning is key. Just subed!

[@64DCPG]

Game changing knowledge for me! Now I have to watch all the other videos.

[@roadtoscratchgolf3481]

Karlton, as I understand you, since I am an early retiree who owns rental property, I can claim active rental losses on other income such as pension, social security and the sale of other real estate? Plus, I use my spouse, who is a lawyer to manage the property as well as pay her a monthly legal retainer. Am I going in the right direction? Thanks.

[@xclservices]

Karlton, thank you for taking the time to make this video and share valuable information. It took me some additional research and study to fully comprehend the rule to the point of confidently sharing this with my clients and give them assurance that, if they meet the requirements, the losses could be legitimately claimed. Thanks again.

[@pearlivory3483]

My client rents out his basement. He’s a travel nurse and outsourced the management. I couldn’t justify him writing off the rental losses. He’d have to be spending 15 hours a week all year to hit that 750 hours. He’s a travel nurse working overtime.

[@kelsyec5419]

i tried this and now i am dealing with an IRS audit ... great work

[@karltondennis]

call my office on monday. we would love to defend you against the IRS on this matter. 714-252-5822.

[@bboyrygis]

When you go onto these websites like Zillow, ECT. I can not find the entire tax history report. I only see the property tax and tax assessment.

[@ifeanyichukwuonukogu6125]

Amazing videos and I have always been a big fan. Wondering if you can do a video on using non profits for write offs and does it provide W2 benefits?

[@s_hazard]

Been studying the topic of using depreciation in real estate to offset taxes and I was thrown a curveball when I came across the term “real estate professional”. This video came right on time and as always, you do such a great job explaining. I do however, find it hard to believe that the “wealthy” are spending 750 hours a year in real estate or own majority of their real estate in short-term rentals… I could be wrong.

[@karltondennis]

Glad I could help. Look forward to sharping your understanding during the Tax Free Wealth Event !

[@wandapeguero7162]

​@@karltondennis​@karltondennisofficial I love love your content. Can I qualify as a real estate professional status if I'm real estate agent?

[@hipzwhitetower7413]

@@karltondennis does looking for a property count towards the 750 hours needed to offset taxes on your w2/1099 before buying the rental property??

[@cmargo10]

@@karltondennisI'm treasurer on a board of directors of a 400 plus townhome community. So I eat and breathe property management as fulfilling my duty as an almost full time volunteer. Would this qualify me as a real estate professional? Bcuz that would be very helpful in my tax life. Great video!!

[@peterchirico2153]

Karlton I wanted to ask if you do tax returns ? Thanks for all your good information.

[@karltondennis]

Yes. Link in description to book a call

[@stuboo]

Thanks. Would love to see a video discussing how the sale of a property might allow carryover PALs to offset W2 income.

[@pbdmd3688]

Thank you KD amazing content! While researching about LLC for my 4 rental props your channel showed up. I’m hooked so much I’m learning here my CPA doesn’t even tell.

[@kimwieczorek1879]

We do Airbnb(rent out 1 of our bedrooms. Been doing it for 2.5 yrs. and luv it). But what are all the tax write offs we can use when we do our taxes in Feb.?? Tytyty❤

[@Vet45tn]

Started my business and bought a rental this year I’ll definitely need your help

[@robertwalker8716]

To show time in the real estate operations. Can you just open a property management company, hire your own company to manage your business and be your own employee.

[@robertwalker8716]

Lol ypu answered it in the video like a minute after I asked

[@nathanaelmccasland2349]

Hey bud, your videos are money!!!!!🎉🎉 Thank you for all the value. Tell your team to keep up the good work for me. You guys are killing this space. Can't wait for the end of the month challenge. Stay blessed.

[@jas2dn229]

Thank you Karlton! I was beginning to look into selling one of my properties where I currently have long-term rentals. However, I am now reevaluating.

[@WillJohnsonSD_Inspector]

Awesome. Jammed-packed information. I actually stop all my multitasking to focus. Saved to research. Subscribed and liked

[@BO1980ful]

Thank you for your video. However, what happens when the property is older than 27 years? Can’t use depression

[@lurch415]

Good question what happened ?

[@jjmmanagement4909]

So if I sell the home in 5 years. And they do bonus depreciation recapture, do they just take back all the money I saved on taxes? Wouldn't that just be a wash?

[@bashar9200]

Thank you Karlton!! I am truly fan of your work. keep it going!

[@ryanoquinn1068]

One of the best explanations of this subject I’ve ever heard. Thanks!

[@TonyRodriguez-Trod312]

Thank you so much for educating us !!! Great Job

[@joshualewandowski3493]

Great video. I have owned a short term rental for about 2 years that have taken a loss each year; however I have been told my w2 income is too high to qualify for those losses. Is that accurate?

[@kristonmyers4365]

Thank you for this video very helpful!! QUESTION! My tax professional is stating if I put my current rental property (which was my primary residence and I moved out of it to make it a rental) into an LLC and do a schedule C with him when filing I will be able to write off all of my depreciation and losses etc and deduct that from my W2? Is this correct or is he misinformed? He said the reason I cannot deduct it from my W2 currently is because it’s not in a LLC… just want others thoughts.

[@chendricks850]

Hey, this is an awesome video!!! I really appreciate your style of teaching. I’m going digging in your channel after I finish this series…

[@sharitaharvey4962]

I love this video

[@roblabar5966]

Great video. If I purchase a short term rental property, and I spend at least 100 hours, and it's more than anybody else, and I now have an active real estate business, can I now consider myself a RE professional and utilize depreciation losses from another investment as 'ordinary losses' to offset my W-2 and K-1 income? I'm currently (passively) invested in a couple shopping centers that are being remodeled and adding tenants to prepare for a sale next year. I want to be able to capture the depreciation (from the cost seg.) to offset OI. Thanks

[@DrJeffreyGarofalo]

It is 20-30% of the building value on homes and apartments but 100% on shopping centers or business commercial buildings.

[@trentalexander2413]

Stellar presentation along with FACTS makes this a keeper!

[@MounjarojourneywithPam]

thank you for this video. I’ve just been studying about this and hoping to have enough courage to start this type of invesment

[@stanleyboutin8230]

Depreciation is a real concern, the property is losing value year over and year. And at some point the owner will have to come up with a huge sum of money to bring the property back to its original value. Its a paper loss but its not a paper loss.

[@beerdanay2157]

hi Karlton, I'm 20 years old. I interested in studying about taxes. I found your channel and it's very helpful (Thanks a lot}

[@jerowm5568]

Absolutely amazing video! 🙌🏽 very thorough explanation of the different avenues to utilize this strategy. Fantastic job 👍🏽

[@jlaudamusic5190]

Yes, but how many weeks a year does the property have to be rented for? What if it is a seasonal property?

[@StoneSpirit7]

One thing I haven’t found much about is if your saving up with a friend and want to invest together how could that all work?!

[@luisarevalo8394]

So if you buy land and develop it that requires time and resources do build plus it’s only land value so you can claim depreciation on new property? Does this new property then have to be a short term rental property to offset other rental income. And put all properties under one company a managing company? What makes that business a managing company besides managing the rents/landlord duties?

[@scorpion55x]

Hey Karlton - if you have a spouse that doesn’t work, can they claim real estate professional status and then file jointly and use their real estate professional status to use passive losses to offset active income?

[@ksirussa]

Yes! Definitely

[@SuperGreatSphinx]

Could you do a video on how to actually fill out a Massachusetts state income tax return?

[@karltondennis]

My Tax software does all of the work for me. This isn’t worth your time in my opinion. Tax filing should be outsourced

[@billanderson5165]

Informative video. One thing I noticed missing was the cap on real estate losses. You are only allowed 25k in loss if you make under 100k w2 income. I’ve lost 20k in write offs 4 years straight. How can I get around this cap

[@pkrvp]

Never seen it explained any better than this 👍👍👍

[@theculturedev]

Excellent work brother 👊 I’ve led multiple people through this same logic path. Blows their minds 🤯

[@GautamAtri]

Someone finally made this video. Fantastic work

[@JacoboMendoza-s1r]

This is a phenomenal video. It all finally makes send to me. I was perceiving this the wrong way.

[@OhioTreasures]

So we inherited the paid off home next door and I work part time in my own cleaning painting business and husband works full time. So i have the time to invest and want to offset his w2 and my 1099. We dont want to short term. So how would I account for 750 hours?set up a management company? Going to watch that next.

[@2L8CO]

You are Awesome my friend. Period. Peace.

[@demsr619]

Hello Karlton you. Ideos are very informative. What tax benefits do I have if I locked in a tenant for a 12 month lease? This is my first rental property I purchased.

[@LW0625]

Wow! I just came across your video, and I can say I learned so much about tax terminology and information. Thank you very much!

[@jeffreysimeon4161]

This is literally the video that made me follow you… 💪🏽 really appreciate all this information. I look forward to implementing all the strategic tools to my real estate venture. Thanks

[@airdoc97]

Thank you KD .....very informative and clear. You wouldn't to have any colleagues in Orlando Florida? To help me on my taxes and maximize my losses as this is my 1st investment home that I have a long term tenant in now?

[@Pun1sh3rz]

Link to a video that connects the property management company while remaining within the guidelines of achieving the short term rental property depreciation realization? To rephrase, achieving the 100 hours materially participating but also pairing the property management company aspect?

[@NickyP1]

So essentially if it's not a short term rental, and youre just renting to a tenant for 12-13 month lease agreements, the only benefit to a rental would be the cash flow from the tenant and a person wouldnt be able to take advantage of any potential losses or depreciation? Was thinking about renting somewhere and using my primary residence as a rental, but seems like it may not be worth it?

[@LyRiCss718]

Thank you. This was extremely informative.

[@EEEE33333]

did you ever make the video on creating a management company for dealing with our personal rentals? Any recommendations on finding a cpa that does Cost Segregation study?

[@duro123]

If my wife stays at home and does all the research for the properties we are trying to buy would that account for the 750 hours?

[@kasiwilliams5927]

Amazing content very detailed in explaining the loopholes for rentals.

[@anon3009]

Question: If I qualify as a RE professional & have a short-term rental that I use personally from time to time is there a limit on how many days I may use it for personal use and still take a passive loss via depreciation on that property?

[@aleksandrshibko4211]

Impressive presentation. Thank you for education!

[@Birbb2]

Hi..been watching your videos awhile now....very good contents and thanks for all the tips :) I want to ask about rental lost, if I am active w2 and have a long term rental. Can I use rental lost(cost seg, de-appreciation...etc.) to offset tax on my W2? I think I remember the max is 25k but not sure.

[@ksirussa]

Do u know answer now ?

[@ArtEscutia]

KD does the STR property have to be in the United States in order to take advantage of these strategies? Or can the property be in another country?

[@karltondennis]

Needs to be US based to use the cost segregation strategy

[@user-oj1jz6gg6j]

I've seen a lot of different videos addressing these topics but yours is truly the best! Thank you sir you have a gift :)

[@hassanzorome7497]

I just subscribed I hope you can make a video about cost segregation depreciation.

[@leebeavers6912]

Thank you so much! First real estate video I have seen that, not only explains the terms being thrown around but, the actual strategies and the rationale for them.

[@jeffhudak1981]

Tell me more about off setting my w2

[@missLonaPooh]

Owning property in another state seems unmanageable. I'm not flying to TX when the toilet is stopped. How do you manage the sorts?

[@ellenoir5678]

The real KD!! What's good Coach

[@devineauto]

Always spitting gems 💎🔥🤙🏼

[@yangli5411]

Thanks for the great video! It sounds like to meet the 100 hours material participation, the short term rental business has to be local. Then how shopping outside states work to meet that criteria? Thank you!

[@cchou0001]

I think I got 70% of this but it was excellent. Thank you ❤

[@alejandrorobles1628]

Only question always heard if you file loss to pay less taxes it hurts to show for banks as a good business to be good for a loan ? So is this a good way to declare loss but still get approved for bank loans

[@philippepepin5769]

so educational amazing way to explain fell i got years of experience in minute

[@patrickdacquel656]

Hey Karlton, great videos. I just bought a multifamily home. If I do a short term rental and a long term rental in the same property, can I write off the depreciation as a short term rental?

[@jackiejoseph3232]

Thanks for your great video. Why does the K-1 (two partners) (two different states) not rolling over the losses to the self-employment taxes or 1040, only carry forward the loss each year. Should it be an override on Schedule-C...Thank you!

[@addowner]

Also, thank you so much for all this information. Learning a lot from you.

[@kavemanbites]

great channel man. you have a new viewer. thanks for sharing your knowledge.

[@addowner]

My husband and I are new to real estate investing, just one duplex so far, long-term rental. I’ve heard there’s also an amount that if we don’t make over that amount in W-2 income, we can deduct up to $25,000 of the passive losses from our W-2 income. What is that amount?

[@ricknightingale6446]

Question, I am a contractor and currently do mostly residential remodeling. I am getting in to the investing side. If I do the rehab work on my own long term rentals would that qualify as work on my real estate rental business as a real estate professional or not? Also, with the short term rental method, does qualifying this way allow you to take advantage of losses on long term rentals as well, or does this only help for short term rental depreciation? Thanks for the awesome content.

[@floonky]

I wonder if this concept can also be used if you rent out your Second\Vacation homes partially for the year, Or is it only for Investment properties.

[@ReLuxProductions360]

Is this still worth it if you are not a high income earner? If your taxable income is around $70-90k.

[@gilev3230]

Hmmm I don't understand the locking and unlock explanation.I confused@ 20:52. Why is it locked ..

[@Whatever0704]

I love this channel and appreciate all the great explanations. If I do not have a W2 and spend most of my time doing real estate deals. I have a few rental properties some of them I manage myself. Some are in other states with property managers. Will I be considered a real estate professional? As I do not have a W2 income. I can use my depreciation on that. But I guess most of my rental profit will be tax free as I will have depreciation plus other costs.

[@tax-modern]

Yeah, if you don't have non-rental income to offset, then there wouldn't really be a reason to try to qualify for real estate professional status. But hours spent on your own rental properties do count towards the qualifying hours. Well, one catch is you probably can't count hours spent on short-term rentals (with an average stay of 7 days or less). Two tax court cases upheld the position that STR rentals aren't a qualified real estate activity to qualify for real estate professional status.

[@hipzwhitetower7413]

@@tax-modern does looking for a property count towards the 750 hours needed to offset taxes on your w2/1099 before buying the rental property??

[@tax-modern]

@@hipzwhitetower7413 Yes. Keep in mind 750 hours is the minimum number of hours, but also real estate work has to be your primary job, so you can't spend more hours on any other type of work.

[@hipzwhitetower7413]

@@tax-modern I live with my soon to be wife, do we have to be married to qualify as she will be putting the 750hrs?

[@tax-modern]

@@hipzwhitetower7413 If you want to be able to use her status to help reduce your taxable income, yes.

[@giraldoint]

My accountant is telling me that if I'm earning over 250k per year, I can no longer offset my taxes with rental real estate losses. Is that right? If so, what else can I do? Thank you

[@tillaroach9330]

Unfortunately, that’s correct.

[@quinntran996]

If you’re a W2 earner and your investment property is not making positive cash flow, can you write off your loss against the the W2 income? Is thete a way around this to be able to write off the loss annually?

[@robertglasby8108]

Where's part 2, long term rental

[@probst9999999999]

OK so in a place with 92% building value you can potentially actually get more year 1 depreciation than the 20% down payment is that right? I have a high W2 with ~45% tax rate and my wife is doing RE agent classes so it seems like once she can qualify as an RE professional it would potentially be possible for me to spend X on RE and in the perfect case maybe get as much as 0.75X back from taxes that year if you do manage 30% first year depreciation on a 92% building value property.

[@michaelspeck9194]

Setting up an LLC for a property I'm thinking of buying. Is that a good idea???

[@wilgensdorisme3414]

Super knowledgeable on the info. Thank You for sharing

[@humangoodness]

Thank you. What if someone bought a camp ground with some short term renters. Can she use the short term rental status to claim nonpassive income to offset the W2 income?

[@TwT101]

Do we need LLC to become real estate professionals or can my wife and I do this w/o opening a LLC. She is a house wife and I have w2 and 1099 income. Last year I paid around 20k+ tax

[@prophetseven728]

How do you find out the Land Value vs Building Value? One of my homes burned down. I wonder what it worth now. I hate to ask a realstate agent as they just want to sell it for me. Blow up the real value to get me hooked into siging paper work with them. Then coming around telling to lower the price for real value.

[@aaronmatteos5556]

Amazing information, is it still good going into 2025 and beyond?

[@bobnewhart6831]

These videos are amazing.