Main Street Business

#590 Be Your Own Landlord: 3 Unique Strategies

• Mark J Kohler and Mat Sorensen

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Why make someone else rich when you could be paying yourself? In this episode of the Main Street Business Podcast, Mark J. Kohler and Mat Sorensen reveal three powerful real estate strategies that allow business owners to become their own landlord, create cash flow, and protect family wealth. From renting your own building to your business, to buying your kid’s college home, to purchasing your parents’ house for asset protection and tax benefits, these proven methods could transform your financial future.

Discover how to structure these deals for maximum tax savings, including cost segregation, bonus depreciation, the Dash 4 election, and creative financing options. Learn the practical and emotional benefits of these moves — from building equity and cash flow to teaching your kids valuable real estate skills, and safeguarding your parents’ independence while protecting their biggest asset.

If you’re ready to stop paying rent to someone else and start building wealth for your own family, this is an episode you can’t afford to miss. Subscribe for more real-world strategies from Mark J. Kohler and Mat Sorensen, and take control of your financial destiny today!

You’ll learn:

  • How renting your own commercial building to your business can build equity and slash taxes
  • The steps to buy your child’s college home and turn rent into cash flow
  • Ways to purchase your parents’ home for asset protection, Medicaid planning, and tax benefits
  • How to use strategies like cost segregation, bonus depreciation, and the Dash 4 election to maximize deductions
  • Creative financing options for owning commercial space, including commercial condo units
  • How to leverage 1031 exchanges to defer taxes and reinvest in new properties
  • The personal and educational benefits of involving your kids in real estate management

Get a comprehensive tax consultation with one of our Main Street tax lawyers that can build a tax strategy plan with an affordable consultation that will leave you speechless!! 

Here’s the link - https://kkoslawyers.com/services/comprehensive-bus-tax-consult/?utm_source=buzzsprout&utm_medium=description&utm_campaign=SALT_Deduction

Speaker 1:

That entire time you were paying rent to someone else, making them wealth. You could have been paying it to yourself and paying off a building. It is so common for us to have clients that have paid off their own commercial space over time and they are miles ahead of the other business owner that paid rent to someone else.

Speaker 2:

Even Mark and I one of our law firm's office buildings our office in Utah we bought. We've been renting it from ourselves for years, and next year the mortgage is paid off in full. We not only have seen it for our clients, we've done this one ourselves. It's just such a powerful strategy. Welcome everyone to the Main Street Business Podcast. This is Matt Sorensen, joined by the dapper Mark J Kohler, and we're here to talk about you, saving taxes and building wealth. We just want to help you.

Speaker 1:

I mean, those are two very admirable goals, and when we can bring those together, man, that's like two plus two equals five. It's awesome. Saving taxes, building wealth. Well, today we've got three strategies that typically are on the top of the mind of investors, and we think these are ones you should know about. They can be extremely beneficial and I love them. I'll rattle off the first two, matt. Number one just renting your own building to your business. Why am I paying rent to someone else, to a third party? This could be a commercial building space, it could be a warehouse storage unit. If you're paying rent to anybody, we want to talk about it. Number two is when your kids go off to college or any family member that is living in a new location for a short period of time and paying rent to someone else, why aren't you the one collecting that rent? Because collecting rent from someone you can guarantee you're going to get paid from is pretty awesome, so pretty cool. And then, matt, the third option.

Speaker 2:

Yeah, what about buying your parents' house and leasing it back to them? There could be some good strategies and reasons to do that for their benefit, and you can also be helping them, as many of us do. Our parents get older, helping take care of them and helping plan for them and their future. And maybe your inheritance too. That can come around the corner. So a couple of different angles to look at there. So we'll hit those three different topics and each of these do have a unique tax benefit to them or a tax strategy, I should say, around them.

Speaker 2:

In addition to owning real estate and it's one of the tried and true methods for our clients Mark and I have done the 10,000 consults with clients over our careers and I just remember doing a lot of estate plans for clients and we do this estate plan questionnaire and I always was curious on how people made their money. I'm just telling you, main Street Americans make their money by having real estate ownership. Holding assets in real estate and business ownership those are the two main categories where I was seeing wealth being built, and so this topic today being your own landlord is a little cheat code, I should say a little way to get into some of these real estate assets that can help you build wealth over time, and why not get a cool tax strategy along the way?

Speaker 1:

Yeah, no, so good. Great way of framing that, Matt. So let's dive into number one being your own commercial landlord. Now the reason why I say commercial is this is going to be a strategy for those of you out there that already own a business.

Speaker 1:

And number two are paying rent to someone else, again, a retail shop, warehouse, storage unit, commercial building. You could be a dentist, a doctor, a contractor, a landscaper, a hair salon owner, whatever. And what's so sad is people in the rear view mirror and I've got to tell you this right now, and some of you, it's going to hurt 10 to 20 years later down the road in their business they realize all of a sudden you mean I could have been owning my own hair salon and paying off the building space, because if we do it right, your mortgage payment is going to be really quite close to what you'd be paying in rent. So now, that entire time you were paying rent to someone else, making them wealth, you could have been paying it to yourself and paying off a building. It is so common for us to have clients that have paid off their own commercial space over time and they are just miles ahead of the other business owner that paid rent to someone else, and it's just such a powerful strategy.

Speaker 2:

Yeah, and obviously it's just even Mark and I one of our law firm's office buildings our office in Utah. We bought it's in a bigger commercial building but it's condominiumized, so we own our own suite. We've been renting it from ourselves for years and next year the mortgage is paid off in full. We actually bought this from some other business that was an engineering company and we assumed their mortgage and they were maybe 10 years in on it. So we got the back end of the mortgage. We just assumed it, took it over and we literally have one year left on the mortgage. It's crazy to think about that. Time does fly for business owners and we will own that property free and clear, paying less rent and it's even going to ourselves than we would have been thrown out the door to some other tenant as well, excuse me, to some other landlord. So we not only have seen it for our clients, we've done this one ourselves more than once.

Speaker 1:

Now let's tackle some of the myths and misconceptions of the business owners out there. When they hear this Number one, they're going to say I cannot afford a building or I can't afford my own space. You would be shocked is my first reaction. Because there is what's called condominium commercial space. So when you see a building, I would say at least half the time that's not one building owned by one person. What they've done is condominium, condominiumized it, meaning they can sell particular floors to different businesses and you actually own that floor and you can build equity and resell that floor or that space. And so and this is strip malls strip malls can be condominiumized. Each little unit in a strip mall can be owned separately many times.

Speaker 1:

And I would challenge you on this issue alone. Call up a commercial realtor. They will be so excited for your phone call. Call them up and go. I own XYZ business, I own a bike shop, I own a restaurant, I own whatever and say I would like to own my own space. Can you tell me where I could get a thousand square feet, 1500 square feet, 2000 square feet? And they will go oh my gosh, come, get in my car, I'm going to show you around town and you can buy space where the mortgage payment can be very similar to what you're paying in rent. I just and now I want to just throw out the second myth and Matt have you comment on this, and that is well. I probably can't qualify for the mortgage and I don't have good credit. You're missing an angle here, matt. Tell them about the rent you're already paying.

Speaker 2:

Yeah, I mean, this is already an expense you're paying for. You're just giving it to someone else and their equity is growing and they're making money off of this instead of you being on the beneficiary on the other end of this and you getting equity in that real estate that you're in. And so what I'll say on this is there's SBA loans out there too. In terms of financing this and acquiring this, some 10% down would be the more standard, some 5%. But they love doing SBA loans out there too. In terms of financing this and acquiring this, some 10% down would be the more standard, some 5%. But they love doing SBA loans on real estate.

Speaker 2:

Getting SBA loan to buy a business or something like that where there's no real estate, involves a little more work, but SBA loans to buy real estate, existing property, is a lot easier to get. There's a lot of little banks, community banks, credit unions that play in that space. I'd kind of chase those down. So just know there's a lot of financing opportunities out there to buy these. And I'll say right now, just from, if you know, kind of think of the real estate investor market out there right now. This is probably where you get the best deals right now, commercial office has been at a discount. Residential homes and stuff like that have not been affected, but in the real estate market, commercial offices is one where there's definitely discounts and deals to be had. So it might be a good time for you to be considering this strategy. For any of you, existing business owners, even you new ones to be like, all right, this might be a good time to pull the trigger and see what's out there at least. Like Mark said, talk to the commercial agent. They can show you the options in your community or where your business is at.

Speaker 2:

So we've got financing Think of SBA. We've got the wealth building concept nailed in. I get it. I get the appreciation of value. I'm paying down the mortgage. I get all that equity. Now it's an expense in my business too, which is cool. I'm writing off that rent anyways. It's just going over to my other company. That's paying down a mortgage, right, but there's more, right, mark?

Speaker 1:

Isn't that right?

Speaker 2:

And this is where Mark's taught me so many tax strategies over the years, of course, but this was one I was like hold on.

Speaker 1:

That's pretty freaking awesome. Well, this is a next level tax strategy Totally. And this is where the one big beautiful bill actually has some direct impact to you on this point the bonus depreciation when you go to buy this building that you're going to rent back to yourself, you can accelerate the depreciation on the 5, 7, and 15-year property of that building, which is called a cost segregation analysis. And you may say another myth or misconception. Well, I'm not a real estate professional. I don't get to take that depreciation as a write-off against my business. Oh no, you're wrong is a write-off against my business. Oh no, you're wrong.

Speaker 1:

It's because of the dash four election which says, under the IRS code, if I own the business and own the building in the same percentages, so if you have two owners here and two owners here, one owner here, one owner here in proportional ownership that are near each other, I truly am buying my own building. I make a special election and now I can treat all the losses on that depreciation as an ordinary loss. I don't have to be a real estate professional, I don't have to materially participate. All of those other rules don't even apply. So, by setting up an LLC to own the building, which you would do.

Speaker 1:

Do not put this in your current operational entity. You open up a sister company in an LLC with the same ownership percentages of the operational business, buy the building and you just unlocked I'm not kidding thousands and thousands of dollars of tax write-off that you can accelerate and maybe even wipe out your entire tax bill this year or for the next couple of years and use those refunds to invest back into your business. Use that money that you would have paid to the IRS to expand. See, think about this. You're buying space that now you can expand into because you're not going to have the tax bill. You've been putting deposits away for now. This is insane.

Speaker 2:

Yeah, I think this is like I don't want to say dynamite or whatever. I mean this is like it's very powerful because so many business owners right, you're the hair salon owner, the doctor, the dentist, whatever the examples we gave out there you know, we hear about these losses on rental real estate and how it's such a great thing. And you hear about, you know, donald Trump's on his tax return paid zero tax. And how did he do that? Well, he's a real estate professional. He's got to take all his rental real estate losses and you're like, well, I'm going to go buy a bunch of rentals and do that and that doesn. But it does work for your building that your business owns here in this self-rental rule where you can take that same strategy. So it's really powerful. It helps you on your tax return. It's a great wealth building strategy. It also gives you certainty in your space. That's another thing.

Speaker 2:

We've had clients over the years that they've got a lease and their lease terms running up and they just think the landlord's going to renew it and they jack up the rent, or they've got some other plans in the building, or someone else owns the building now and you're not happy with whatever. You got to renegotiate and so, um, there, you get a little more control. You can control your destiny a little bit more when you um own the space as well. So, um, I love this one. I think this is a kind of a no-brainer. You've got to really consider this. If you're a business owner with a location, like really think through, like why not? I kind of want to. You know, this is like one that's like why are you not doing this one? And Mark and I have done this in two different business locations too. So I'll just say, like we've hit this strategy here of buying our own office location where we're at.

Speaker 1:

Yeah, no super powerful. All right, now let's move to number two, and that is for any of you out there. Again, these strategies don't affect every one of our listeners, but if this is in your, the stars align. You're the avatar for this. This would be any of you out there that have a kid headed off to college Now. This could be. Maybe you're looking out two years out from now, or maybe they've already been at college for a couple of years, or they could be looking at graduate school. So you want to be thinking ahead here as much as possible, if possible, and say where is this kid going to go to college? Where are they going to college now? How much are they paying in rent? Where are their friends paying rent? I'll give a classic example.

Speaker 1:

Had a client. His daughter and son were going off to Salt Lake City to go to University of Utah. They lived in California, they didn't own any property in Salt Lake City, but they were like our kids love that school, they're going to go to the? U, which I'm a fan of, and go Utes. So they're going to go to Salt Lake.

Speaker 1:

And this family? They ended up buying a single family home in the Sugar House area which is right in biking distance of the campus and they did room rental. They were able to do four rooms and he put his daughter in the home and she rented out three other rooms to her friends. Those three rentals room rentals paid for 90% of the mortgage and she didn't even have to pay rent anymore where she was living and by adding that into the mix, he was actually cash flowing this property. So by going and buying this property, they eliminated her rent and actually started to create cashflow and the story begins. There are so many ancillary benefits here, but that's the example. Before I steal any more thunder here, this, this is again incredibly powerful, matt. What's your take on just that that equation right there? Yeah, I mean, that's is again incredibly powerful, matt. What's your take on just that equation right there?

Speaker 2:

Yeah, I mean, that's another again. It's like you're going to have an outlay of money already. Who gets to benefit from that? Maybe I can be the beneficiary on the other end by owning the real estate here and again instead of some other landlord. And also, if you're willing to take that next step, like they did here, of like getting the roommates as well, that that's where this becomes a profit center, not just like saving, you know, on the cost, but this is now a profit center right, cause there's other revenue coming in. And I think that trend though that kind of roommate scenario, is a huge trend right now. We're seeing this with co-living concepts A lot of real estate investors transitioning single-family rentals that are even in their existing portfolio.

Speaker 2:

It might be a three-bedroom, two-bath. They rent to one person or a couple or a family. They're like we're renting it to three single people, we're renting three rooms out here now, kind of a roommate scenario. And this has been going on in, you know, expensive areas for decades right, new York City, san Francisco, very expensive places. Everyone just has a roommate right In their 20s and 30s, like you're, like I mean, for the most part, and so that's because just the cost of housing is so high.

Speaker 2:

Well, now we're seeing that same thing happen. Cost of housing is so high and people are back to okay. This roommate scenario co-living, whatever you want to call it is a good fit, but so I think it's a great strategy where you can maximize rental income the college rental being the one here where you might have one of your own adult children being in, that you're owning it and and getting the benefit of owning the real estate and, um, that outlay of money is coming back and helping you because you would have been paying rent anyways to help your kid maybe go to college.

Speaker 1:

Yeah, and let's talk about some other benefits before we even get to the tax strategy here too. First, what it's been an incredible blessing for their family and he's been teaching the dad I've worked with the dad for the most part and he's been teaching his daughter how to be a landlord, how to manage a lease agreement, how to manage her roommates. This has been a huge eye-opener for both of his kids on what this experience has been all about. And to teach your kids about rental property. And oh, you got to take care of the yard. Oh, you need pest control, you got to worry about this, you got to worry about that. And these kids have just been oh my gosh, I'm learning practical business skills while going to college. Unbelievable.

Speaker 1:

Number two, again, we're building equity. So instead of paying rent to someone else, his daughter is paying rent to their own LLC with the property and three other girls are paying down that mortgage. So he's building equity. And now they have choices in three years, two years, four years, do we keep it as a rental and rent it to a family? Do we keep it to a rental and rent it to four more college students? Do we sell it and do a 1031 exchange and trade it for a property where his kids are gonna go to graduate school, do we 1031 it back into the hometown and buy a commercial property to rent back to your business? So now you're not going to pay any tax on sale and move that investment to a new location. That's the concept of the 1031 exchange. So we're building equity, we're snowballing it, we're teaching our kids strategies here and we're building cashflow. The list goes on and on.

Speaker 2:

Yeah, Dang, I love that. I didn't even think of next steps there, on what to do next when they move on. I mean, that's obviously the next question that you should be asking and thinking about. It's like 1031 exchange. I love it. Repositioning they might move to grad school. Put it back into some other market you might feel good about, Because a lot of times your kids are going to college. It might not be the best rental market you would choose, but you're choosing that location for those other reasons that we talked about the kid's going to help, they're going to learn how to manage it and you have that outlay of money. You're going to be paying anyways if you're going to help them rent a place and so, um, but that once they're gone, that decision-making might shift of. Well, I'm going to reposition the equity here, um, into something else that might be a better cash flow opportunity. So love that.

Speaker 1:

Great, great, yeah. And now for the tax benefit.

Speaker 2:

Great solution. I was going to say there because that was the next piece I was thinking about.

Speaker 1:

So and now for the tax benefit. On a year-to-year basis we've got depreciation again. So the first practical benefit is you won't be paying tax on that cash flow, so any additional cash flow will be offset by the depreciation again. So the first practical benefit is you won't be paying tax on that cash flow, so any additional cash flow will be offset by the depreciation. So there's no income tax that you're going to be affected by.

Speaker 1:

And if you do qualify as a real estate professional another strategy for another day this rental property is included in your portfolio of real estate. So now you could take depreciation there if you qualify for those pass-through losses as a real estate professional. You could even convert this into a short-term rental once the kid's done with college. There's a lot of families that want to rent a short-term rental to go for graduation, to go visit their kids. There's a lot of short want to rent a short-term rental to go for graduation, to go visit their kids. There's a lot of short-term rentals in and around colleges and universities for that purpose of alumni parents that are coming back to visit. So that's another tax strategy in that if it could qualify as a short-term rental property, we could maybe unlock the depreciation.

Speaker 1:

So meet with I'm going to say this right now in the description below we have a link for the depreciation. So meet with I'm going to say this right now in the description below we have a link for the law firm. Please get a tax consultation. A comprehensive tax consult is what we call it practically on our website, and one of our tax lawyers will meet with you and go through some of these ideas, build a plan very affordable. We want to make sure you we save you in taxes. Whatever you pay us for just a game plan. You don't have to fire your accountant, don't have to fire your other lawyer, but this is something we specialize in. So get a console, get a plan and look at some alternatives here where your kids are going to college.

Speaker 2:

Yeah, and, of course, our law firm is KKOS Lawyers. For any of you driving in the car right now you're like, oh well, we're going to Google this later. Kkos Lawyers, that's our law firm. We've been helping clients across the country for 20 years now. We'd love to help you All right. Last strategy here Buying your parents' home. Hmm, Should I buy my parents' home? Should I wait for them to pass away and then inherit it? I know that might be one of the questions here, but we've had some clients do this over the years. So why would Mark, why would I buy my parents home now, rather than just inheriting it when they pass away?

Speaker 1:

Well, there's several reasons and you have to make sure it again aligns with your situation. Yes, the first one and I don't know if there's any order of priority here is that your parents may be on a fixed income. They may be needing to go on some sort of Medicaid assistance in the future. You're seeing this come down the road to them the cost of the home, property taxes. Maybe they do have a mortgage. Still, not all parents have paid off their home. Some of our older parents may have, but that home may be a burden to them financially and they may need to qualify for Medicaid down the road.

Speaker 1:

When you buy the home from them, they get stepped up basis. You get stepped up basis to the purchase price. They're not going to pay any tax, typically because of the 121 exemption up to 250,000 or 500,000 of equity. So they're not going to pay any tax. You get stepped up basis. You could assume the mortgage they already have. There may be no need to go out and get a new loan and any equity that you're paying them for will be in a note that, upon their passing, would be forgiven.

Speaker 1:

You could structure this there's no cash transpiring hands here, no new mortgage transpiring hands, and so now you're the owner of the property stepped up basis, it becomes a rental property for you and you control the equation.

Speaker 1:

So now your parents don't have an asset that's going to hold them back from a Medicaid application and you're able to gift them rent through us on the tax return. So they're not going to actually pay you rent, you're going to gift it to them, meaning, hey, mom and dad, go ahead and pay me rent, I'll give it back to you. But you actually don't have to go through the process, but you just put it on paper that I'm gifting you the rent, don't pay me. So your parents feel secure, they are able to apply for better support from services they might need without an asset on their books, and you're going to inherit the property anyway and you get it right now at stepped up basis. Now that may have sounded a little complicated, but this is a strategy we see over and over again, where families work together to better protect mom and dad as they get older, before they pass away.

Speaker 2:

Yeah, let me just add into that just a couple of thoughts. As you're thinking through that is sell a home exemption. Okay, they sell their home as long as they've owned it two years out of the last five, and these are typically the family home they've been in for a long time. So we're assuming they've owned it for at least a couple years. And if they're still married, you know your parents are both living there, or at least one of your parents, and they're remarried, you know, if they're married, finally joined 250 K If it's single, 500 K if they're married.

Speaker 2:

So that's how much gain they can receive on this. That goes into their pocket, no tax, and that's just the gain. Of course they could be getting back what they paid in it too, and and and stuff. That's just the taxable gain. So, um, and then the next step is on that rent, that number of gifting amount is $19,000 a year. That's the annual amount you can gift someone with no gift or state tax consequence. And if it's both your parents, that's what is that? That's $38,000. And if you got a spouse who's gifting so now we got four people in the mix you know, so to speak, we're up to what are we at.

Speaker 1:

We've got 6,000. $76, so to speak. We're up to what are we at? We've got 6,000. 76,000. 1,500 per person per se, and we've got four people involved. So now we're going to be able to cover rent, because it does need to be fair market value, and that's where I'd like, where Matt's going You're going with this is rent needs to be fair market value and the purchase needs to be fair market value. Everything else in between can be on paper.

Speaker 2:

Yeah, cause let's say, the rent realistically for that home would be $5,000. Well, that's 60 K of rent. So I'm going to need to be looking at that gifting amount to make sure. You know, maybe if my, if it's just your, your mom, let's say it's that just lives in that home and is renting Well, I got 19,000. I can do If I'm married, my spouse can do 19,. We're at 38. You know, you guys, the difference. If you were 60,000, let's say what would need to be market value for rent. That would be and maybe your mom has the income to pay that. You know that discounted amount, that difference to make it up to where you will have a real fair market value rent.

Speaker 1:

And let's talk a couple other points that get to play, that really play into this asset protection. If this home's paid for and you've got grandpa driving around in his car and I it could, it could be ugly and and I I want to say this is a very sensitive topic and I get a little emotional talking about it because I've had to take away the car keys from my parents. That's not fun because you know it's dangerous for them being on the road and they don't feel that, they don't see that. And they've got their home paid for and grandpa's going down to the grocery store every day and you're scared to death. He's going to kill someone or kill himself.

Speaker 1:

And so when you take the home out of their balance sheet and there is an accident, heaven forbid that home is not going to get sacrificed in a lawsuit. And so there is an important asset protection factor here, let alone Medicaid planning, and I think we forget that. Our parents, we need to start to take over as the parent and it's a very uncomfortable thing but it's a very touching and special thing because the parents all of a sudden realize they do need you and there's that tipping point and the home is typically their biggest asset and their biggest fear, because parents I'll tell you this too, everybody, if you haven't been at the table in this, and I've been at the table so many times their biggest fear is they can't take care of themselves. They don't want to be a burden, and if you can create a structure where they feel like their home is helping them feel independent they, it's a huge win.

Speaker 2:

Yeah, and that by renting it back to them, they get to stay there too, which is typically where they know people is, where their family and their friends and all that stuff resides, and there might be a place where they transition out and maybe they need to go to an assisted living or some other place like that. But this is a good step where you are, like you say, Mark, coming in and helping them and we do kind of got to take the parental role at a certain point. Really, I mean, wow, like spot on and practical. Got a little emotional there, but I think you know these are like dynamic situations where I'll just say of like the why behind you might do this and we've kind of focused on all right, think of the tax benefits, right, I like there's even that asset protection angle too that you dived into.

Speaker 2:

Maybe there's some Medicaid planning issues. There's a little bit of timing rules on that, how long you might have to wait if they do need to apply for Medicaid or certain benefits, if they need those for Medicaid or certain benefits, if they need those. But then the other thing is, if you think, well, what if I just they still live in it or even they move out. I want to just throw one other like alternative option you know of. We can obviously sell it and get the sell of home exemption up to that 500 K. But what if there's a million dollars of equity in this, in this home, and there's a lot of our, our parents, you know, that are lived in a place for 20, 30 years? I have a million plus in equity and that might be one where you take a different angle Maybe. Actually if, from a tax standpoint, you might think of maybe we do hold that longer in their name.

Speaker 1:

We've got to be careful and look at the possible tax ramifications of them selling rather than getting a stepped up basis at their passing, and if the home is worth that much, they may want to even start considering a reverse mortgage in order to pay for their long-term care. A reverse mortgage in order to pay for their long-term care, and now selling the home becomes a secondary or third option, which is fine. And so we need to look at a variety of factors here and what's best for mom and dad. How are they going to pay for their future? Do they need Medicaid, do they not? Can they self-insure themselves with the equity in the home through a reverse mortgage, which can be very powerful? And so get that consultation with all the options on the table. Now I want to just say the last point is that, for me, is the tax strategy. Where have we got to that? Because what's amazing here?

Speaker 2:

is the tax strategy on the front end.

Speaker 1:

Yeah, when you're not going to visit mom and dad, you're going to visit your tenants. So I'm writing off auto dining repairs, maintenance improvements and even if I'm not a real estate professional, those are carry forward losses. So after mom and dad are gone or maybe they go into hospice and we sell the home I've got carry forward losses that I can use against the sale. I could do a 1031 exchange again. I could put other tenants in there. I can do a rehab. Once mom and dad move out, which is typical, we're going to keep it in the same format. Mom and dad still have carpet from 1984, whatever the case is. So once mom and dad are out, we're gonna do a fix and flip in rehab.

Speaker 1:

And I'll say this last dynamic that's super important Siblings. There's gonna be siblings at the table that are not gonna step up to the plate and help mom and dad. And if you're the one to step up to the plate and help mom and dad, you deserve the damn house Now. Keep it fair market value, buy the home. Keep it fair. Keep it fair market value, buy the home. Keep it fair. Keep it transparent. But don't use this as an opportunity to screw over your siblings. Do it as an opportunity to step up and be the sibling that takes care of mom and dad. But be careful Make sure you're communicating with your siblings on the entire plan and don't take advantage of the situation.

Speaker 2:

Yeah, I think that's such a great point. Oh my gosh, how many times have we seen this issue actually? And the family home is probably the one that sometimes, like they've seen like some weird scenarios, someone gets added to the deed, the other kids didn't know, the will or the trust is unclear on it, and oh my gosh, yeah, so definitely communicate this and that should be part of your estate plan too, like this should be, you know, very clearly identified. It's out of the estate already, or this is what we're planning to do in the estate. So there is some clear planning on this for the family that's going to have to take over this estate later on. And I like the communication, but I actually like it in writing too, you know. Let's get it legally documented as well.

Speaker 1:

Good stuff. I mean just hopefully we've opened your eyes, folks, to three potential strategies that could benefit you and your family. Grateful you're here with us and I can't encourage enough an annual comprehensive tax strategy planning meeting that you can take out the door and implement with us or with your current professionals. Get that second opinion. There's always something out there that we can learn from. I learn something new every time I'm on a podcast with Matt. I just want all of you out there to keep learning and keep getting strategy sessions under your belt. I know it'll benefit you.

Speaker 2:

Yes, Thank you for joining us everybody. We'll see you next time on the Main Street Business Podcast. Until then, please share this with your friends and family. We'll see you next time.

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Mark J. Kohler

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