How I’m Buying an Investment Property Right Now
August 26, 2025
✨ Rates are high. Rents are down. And guess what? I’m STILL buying real estate. 🏡💼
Key Steps in Your Strategy:
Selling an Existing Property:
Selling an Existing Property:
- Selling a property to the City of Bonita Springs.
- Using a 1031 Exchange:
- Avoid paying capital gains taxes
- Sale proceeds go to a qualified intermediary (money is held and not touched).
- All proceeds are reinvested into a new property.
Purchasing a New Investment Property:
- Property will be used as a short-term rental (Airbnb).
- Already under contract for purchase.
Cost Segregation Analysis:
- Breaks property into land value and building value.
- Accelerates depreciation of building components.
- Bonus depreciation allows large deductions in the first year instead of spreading over 27.5 years.
- Deducts against W2 earned income because you and your wife qualify as real estate professionals.
Tax Benefits Highlighted:
- Avoid capital gains on sale due to 1031 exchange.
- First-year deductions via cost segregation could be around $100,000 or more.
- Potentially huge tax savings, even if cash flow isn’t high (though in this case, cash flow is positive)
Advice to Buyers:
- Work with a knowledgeable realtor and lender.
- Understand tax benefits of real estate investing.
- Buying now can make sense even with high rates and slightly lower rents.
Takeaways / Actionable Insights:
- 1031 Exchange: Reinvest profits to defer capital gains.
- Cost Segregation: Accelerates depreciation for larger upfront tax deductions.
- Real Estate Professional Status: Maximizes tax benefits by offsetting earned income.
- Cash Flow vs Tax Strategy: Even if immediate cash flow is modest, tax benefits can make the investment profitable.
- Practical Tip: Buyers should always coordinate with both their realtor and lender on these strategies.
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