Real estate capital raising and syndication
Real Estate Investment Tax Strategies to Research
Real Estate Investment Tax Strategies
Real estate sponsors and investors who want a list of tax topics to research with their own attorney and tax advisor.
Said on the call
"Consider raising capital from these platforms that have 10,000 to 20,000-plus self-directed IRA investors on each of the platforms."
"It could be that those who don't care pay a little bit less in fees, and those who care about taxation pay a higher fee."
"I went to people who are very savvy in the space and I asked them, "What tax strategies do you know of?" And everyone just says, "Oh, cost segregation," and that's pretty much it."
The short version
Richard C. Wilson lists several real estate tax areas for investors to research. He starts with self-directed IRAs, which some investors use to invest in real estate. He then covers cost segregation engineering studies, which estimate the value of a structure separately from the land. He also describes an idea for treating different investor groups differently, which he says to explore with the right attorney and tax advisor.
The talk also points to the real estate professional status, a topic to review with a tax advisor. Other items include bonus depreciation on tenant improvements and equipment, qualified opportunity zones, 1031 exchanges, and royalty structures. Richard says the 100 tax expert interview series is about halfway done, and most experts he first asked named only cost segregation. These are topics to research, not advice.
On the record
- Self-directed IRA platforms mentioned have ten thousand to twenty thousand plus investors each.
- The real estate professional qualification is a topic Richard suggests reviewing with a tax advisor.
- Richard's tax expert interview series had reached 52 interviews, with a goal of 100.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Real Estate Investment Tax Strategies. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around investor class structures, tax qualification requirements and offering documents. Do not use AI to write your own legal agreements.
What stood out
- Self-directed IRAs as a capital source. Some investors use self-directed IRAs to invest in real estate. Richard suggests considering platforms that he says have 10,000 to 20,000-plus self-directed IRA investors each when raising capital.
- Cost segregation studies. Some owners commission an engineering study that estimates the value of the structure separately from the land. A tax advisor can explain whether any tax treatment applies.
- Split depreciation between investor groups. Some sponsors talk with an attorney and tax advisor about whether a deal could be arranged differently for different investor groups.
- Real estate professional and build-outs. The real estate professional test is a topic to review with a tax advisor. Tenant improvements and equipment, such as a restaurant build-out, are another topic to review with a tax advisor.
- Deferral tools and royalty structures. Qualified opportunity zones and 1031 exchanges are mentioned as topics to research with a tax advisor. Richard also suggests asking an advisor about royalty structures compared with other approaches.
Related questions
- What is a capital stack in commercial real estate?A capital stack is the full set of money that pays for a commercial property, ranked by who gets repaid first.
- How do I raise capital for a hotel purchase?Many hotel buyers fund the equity through joint ventures with family offices and wealthy individuals, then add debt on top.
- What do LPs want to see in a sponsor's track record?LPs want a sponsor they can count on.
Questions about this video
What is a cost segregation study?
It is an engineering study often done after acquiring real estate. It estimates the value of the structure versus the land, and a tax advisor can explain how the results may relate to taxes.
How can depreciation be split between investors?
Richard says some sponsors explore this idea with the right attorney and tax advisor. Whether this makes sense depends on the specific deal, so check with counsel.
What is the real estate professional test?
Richard describes it as an IRS qualification that he suggests reviewing with a tax advisor.
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