The Tax Secrets Wealthy Real Estate Investors Use (And You Don’t)

In this episode, Craig McGrouther and I tackle two of the most frequently asked questions from investors: bonus depreciation and 1031 exchanges. With 100% bonus depreciation returning, they explain why this doesn't automatically mean 1:1 depreciation for investors, breaking down how leverage, CapEx, and land allocation affect your actual depreciation ratio. Using our current deal as an example, we can show why conservative 65% leverage yields ~45% depreciation rather than the 90% you'd get at 80% leverage, but creates a much safer investment.

We also demystify 1031 exchanges, clarifying the crucial difference between exchanging INTO a deal (minimum $1M via tenancy-in-common) versus exchanging OUT at the partnership level after exit. I emphasizes the "magic" of syndications: allowing everyday investors to compound wealth tax-free through partnership-level 1031 exchanges without needing millions upfront.

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