Summary

A new tax bill has been introduced that significantly impacts investment accounts and retirement savings strategies.

Highlights

•  Reduces after-tax returns for high-income investors due to increased capital gains tax rates.
•  Changes rules for retirement accounts, including adjustments to contribution limits and required minimum distributions.
•  Encourages long-term investing by offering tax breaks for investments held over five years.
•  Limits tax-deferred exchanges for real estate and crypto, making it more costly to roll over gains.
•  Increases reporting requirements for brokers and investors, aiming to improve tax compliance.

The new tax bill just changed everything for investors from bonus depreciation to opportunity zones. Everything is changing and you need to understand this and act fast. Yeah. And today we’re bringing Scott on. So, hey Scott Saunders, let’s talk about this new big beautiful bill.
But more specifically, uh, you know, we’ve been teed into how it’s going to affect real estate folks, real estate investors, LPs, GPS. This is a real boost. Yeah, this is actually a game changer. I’m I’m so excited that we’ve got this for investors. There are so many good things loaded in this new tax bill that are going to help him going forward.
And, you know, the biggest one for everybody is we now have permanence, right? we’ve got things that are certain and um that helps everybody with investing. So, I’m super excited to kick around some of the highlights in this new tax bill. Yeah. So, so let’s let’s let’s go down like obviously we we talk about the 1031.
When you told me that you’ve done 100,000 1031s, I was kind of blown away. So, so obviously you’re somebody who’s been around the space a long time. You’ve been lobbying for this. You’ve been in Congress um you know talking about this. This has been on and off the chopping block for years. that’s here now. Again, it’s not it’s not in jeopardy. Let’s talk about that one. Yeah, you know, that’s a big one.
For the the last four years, it was under attack. They were looking to cap out 1031 at just half a million dollars of gain per person, which really would have effectively crushed 1031s on the commercial market. So, that was a big factor. Um, I’m pretty involved with the government affairs committee of our trade association.
I work with NAR and really just spend a lot of time back in Congress educating people in Congress on the benefits of 1031 exchanges, why they help with transactional activity, they allow people to redeploy capital, and the big one is it’s a job creator. Almost a million jobs are created with section 1031 exchanges.
So brokers, developers, people that do loans, the title company, the appraisers, anybody involved in a real estate transaction is going to benefit from that increased transactional activity, which you know, as you guys know, the market’s a little soft now, right? On on both the commercial and residential side, we just don’t see traditional volume.
So that getting the volume back up is going to help out everybody. So fortunately, we’ve been lobbying in Congress. And when I say lobbying, it’s probably more just educating, you know, why it’s good for the economy. 1031 has been around um you guys probably know since 1921.
So, I mean, it’s been in the tax code for a long time. And fortunately, with this new tax bill, nothing’s changed with 1031. So, we’ve got no risk right now. And we’ve got a runway where we’ve got all these new opportunities that are coming out that I’m super excited about.
Well, and and you know, if you could I I think what’s interesting because we have a lot of investors from out of the country, you know, Canada, Mexico, Asia, Europe, and and they’re like, you guys have the Ted31, that’s a game changer because, uh, we were just studying the, you know, kind of the Canadian mortgage resets. Like they they’re they’re, you know, they reset their mortgages in in, you know, three, four, five years.
Um so there’s a they have a whole reset problem because a lot of people are sitting on these low interest rates. What um if they had the 1031 then they could they could legally right roll that into something else. And now I know at the higher rate but the point is they at the at the situation they’re in it’s going to reset at these higher rates but being able to preserve that equity uh here uh and you know around the world people are pretty envious about the 1031.
Yeah, 1031 is unique to America, right? It’s part of our US tax code and it really gives us a big advantage. So you basically with a 1031, you take the equity and when you sell the asset instead of receiving the proceeds which will make it taxable, you have the money held by what’s called a qualified intermediary and you’ve got some time deadlines to reinvest. But what you get to do is you get to redeploy that capital hopefully into a better performing asset.
So you might go from one asset into two. You might go into an asset that’s going to give you more cash flow or better return. Or maybe you even reposition it into a different market. Right? You’ve got a lot of assets on the West Coast and you want to take advantage of some of these growing markets, places like Texas and Tennessee.
Redeploy some capital long term that over the next 30 years, you probably see more appreciation and a better return on investment. So yeah, 1031 is something that we have in the US that’s such a powerful tool and allows us to do that. Now, you only can do it on US domestic property, so it’s got to be within the United States.
That’s the one, you know, major limitation. But anywhere in the US, you can take advantage of it. And you’re right, I think a lot of other countries are a little envious of our real estate tax laws because they’re favorable to investors for so many reasons. So, let’s discuss that.
Let’s talk about how this tax bill that Trump just passed um is going to affect uh real estate investors in a positive way. U a lot of ways. Let’s let’s start off with a couple of biggies. One didn’t affect 1031. Didn’t affect carried interest. Didn’t affect capital gain tax rates. And what it did is it locked in the lower rates from the tax cuts and job act. Those are now permanent. They’re locked in.
So, people now know they’ve got lower rates, which, you know, just from the onset, that gives you more capital to buy your first investment property or expand, right? You’ve got more take-home pay, and now you’ve got more capital to build your investment portfolio. So, right off the bat, that’s a big win for everybody, business owners and investors. Yeah.
And I think what’s interesting right now is as everyone knows, there’s a lot of trapped equity. I call it frozen. You know, a lot of people are sitting there with these low mortgages, low interest rates, and and um their prices, as you know, if they’re in the single family side have gone up. So, if they if they’re in the in the rental space there, they’ve got a lot of equity. This is a great tool.
There’s a tremendous amount of trapped equity where now they can legally they don’t have to sell, they don’t have to exit, they don’t have to pay capital gains. There’s there’s a lot of choices, right? Yeah. Absolutely. That’s the big one. You can just redeploy that equity and keep it working. So, one of the big myths is I have to pay taxes sometime with the 1031 exchange. You can redeploy it over and over and over again.
So, it allows you to go from one asset to two, two to four, four to eight, and then kind of move into commercial investments and really grow your portfolio. So, it’s a great way to do that. the carried the carried interest, a lot of people might not know, but when you’re in the game and you’re putting a deal together, there’s this phantom equity that you have that you know hasn’t really matured yet, right? Like it’s not really yours.
Um, and that’s called carried interest. And uh it it’s a it was it’s been under attack for a while and I’m I’m really glad they kind of put that to the side because that’s just going to promote entrepreneurship and and people doing deals again. Yeah, absolutely. That’s a big one. I think it’s been put, as you said, it’s been put to rest.
Now we got certainty and that means more people are going to jump into investment deals and put to put deals together, which creates more development and more opportunity and hopefully more supply where we desperately need supply in the marketplace.
Do you think that’s going to move the real estate market any with this, you know, bonus depreciation and because, you know, right now with almost 7% rates, the market’s pretty soft. Yeah, I I think personally I think the bonus depreciation so that’s that’s a gamecher. So let’s kind of unpack that a little bit. We bonus depreciation is when you’ve got the ability to write off depreciation in year one when you acquire an asset.
So instead of depreciated over 27 12 years residential or 39 with commercial, you’ve got the ability to kind of reclassify some property as personal property and then you’re able to take a write off, you know, and that varies a little bit, but you’re able to take a write off at the time of acquisition. That’s a big deal because it gives people a big tax advantage and that tax advantage I think is going to drive deals.
So what we’ve had right now, so tax cuts and jobs act restored bonus depreciation, but then it began indexing down by 20%. So this year in 2025, there’s only 40% of the bonus depreciation available. The big change with the new tax law is we now get 100% bonus depreciation and it’s permanent. No sunset. That means now as we buy assets going forward, everybody will be able to take advantage of that.
So, I think personally bonus depreciation is going to drive deals on the commercial side. It’s going to drive deals on the residential side. It’ll even help out short-term rentals, vacation markets. I see a lot of applications. So, people you you never want to make a deal happen just because of the taxes, but a lot of times that’s a lot of icing on the cake that makes a deal a lot more attractive. Yeah. And let let’s let’s walk through a real example.
For me personally, you know, years ago, uh, as you know, bonus appreciation was 100%. And, um, and so there was a time where I was exiting some things and taking some chips off the table, as you would, right? Uh because you can’t roll it all forward. You do need stuff, you know, from time to time. You want access to that capital. At the same time, I started buying these billboards.
As you know, the billboards were largely well, they were they fell into that bonus depreciation category because they were land improvements. And so, we were exiting one thing and then buying billboards at the same time. And and we were getting huge tax advantages from be able to buy these billboards because they fall under bonus depreciation and offset tax. Right. Right. No, it’s huge.
Think about what depreciation is really. It’s it’s kind of a benefit that you get, but it doesn’t really cost you anything and you can use it to offset other income. So, that’s why it’s a powerful tax planning strategy. Yeah. People are like, “Why are you getting into billboards?” I go tax like literally like I’m trying to offset legally tax using what the government’s given me already in this form of bonus appreciation.
And by the way, I actually think this also falls into this private jet category. like you know jets are in this category. Oddly enough, they fall into this category. There’s a whole bunch of things in the bonus depreciation category that people may or may not um uh you know recognize.
What are some things that you’ve seen, Scott, that people what you know if you had your crystal ball and now we got bonus back at 100%. What do you what do you think is going to happen as far as investments? Well, I you got in a couple areas. business owners, are you going to use it to make purchases because they’re able to get 100% bonus depreciation? So, business assets that every entrepreneur is going to need, that will go up.
On the real estate side, a lot of people are going to take advantage of buying real estate assets, turning right back around and doing a what’s called a cost segregation study to reclassify that and break out the personal property components.
So real estate of all types is going to benefit, right? Commercial real estate certainly will get a little bit of an uptick or potentially a big one. I I think this is going to be kind of start as a little trickle and I think we’re going to see this new tax law is going to really start later on in the year increasing uh economic activity. We’ll see people buying assets because they want to pick up the bonus depreciation and they need that depreciation to offset other types of income. So I I see it going everywhere. You’re right.
Jet aircraft, a lot of other types of personal property are going to benefit as well. So this is going to help kickstart the economy, right? People are going to go out there and buy assets, take the depreciation, and as they buy the asset, they’ll use it in their business, which will create jobs.
So, I mean, that’s the whole goal of the administration is that this fuels economic growth and gets people jumpst starting businesses, jumpstarting real estate, and those people are all going to be creating more jobs out of that. It’ll create some expansion, and the goal is that expansion will then create more tax revenue down the road that’ll help offset some of these costs.
That’s the I think the overriding goal of what’s in place. So, let’s rewind a little because you skimmed over something when you were saying you could buy real estate and then you could How did he say you could go through it and and pull something out? I I don’t cost segregation. Cost segregation. Can you explain that because I don’t know what it is and I’m assuming a lot of people don’t know. Yeah, let’s let’s unpack what cost segregation is.
So, you’ll hear it referred to as a cost seg or cost segregation study. When you buy real estate, you’re not just buying real property. And so this is something that was um challenged in the tax courts I think back in 1997. HCA is a um a big commercial property owner.
They bought a commercial property that had a lot of uh personal property in it. It had equipment. It’s a healthcare reed and they had all sorts of healthcare equipment in the walls. They said, “Wait a minute. How come we have can’t depreciate all of this equipment that doesn’t have a life of 39 years?” And they challenged it in tax court. and they won.
And basically what it means is when we look at a piece of real estate and let’s just pick a really simple one. Let’s just say a million-doll property just to pick a number. It’s not all real estate. There’s some different types of personal property in there with different property lives.
And so the first thing you do with real estate is you can’t depreciate the land, right? That’s not something that’s depreciable. It’s permanent. You can only depreciate the improvements. So, if I were to toss out a rough a number on a million-doll property, let’s say 20% of that is going to be the land. And that’s fairly typical around the country.
You can go to your local assessor and find out in your area exactly what it is. So, now we’ve got 80% of that is the building itself. Well, a building has all sorts of other property that’s in it. You’re going to have landscaping in a building. You’re going to have fences. You’re going to have fans. You’re going to have um a kitchen with equipment and appliances. You’re going to have carpets that are going to need to be removed.
You’re going to have blinds on windows. It goes on and on. So, what do you do is you have somebody with a cost segregation study that will actually go to the property and they’ll look at your particular asset and then they’ll reclassify what was considered real estate that we depreciated over a longer lifetime.
and they’ll break it out and they’ll actually look at all the different components that are there and then they’ll break it out into those shorter life depreciable life schedules which would be a personal property. And so there are different schedules for different types of personal property on a typical and I and I’ll just give a rough example on a million-doll property you look at somewhere between 20 to 35% of it can be reclassified as personal property.
So taking the example there of 800,000 if 30% of that there’s $240,000 of personal property that now with because it’s bonus depreciation I get to write off $240,000 this year 2025 rather than depreciating it slowly over 39 years if it’s commercial or 27 and a half years if it’s residential.
And think of what we had with inflation, right? Inflation reduces the purchasing power. So if I get that tax advantage today in 2025 rather than little bits of it all the way along and you know 10 years and 20 years and 30 years from now, I get all that purchasing power today as a big tax advantage. So now we’re using inflation to our advantage, right? We’re using not only a tax code to advantage, but we’re taking advantage of inflation.
So you get a cost segregation study on your building and then you take advantage of that additional depreciation in the year of acquisition. Yeah. So you’re you’re you’re maximizing your write- offs in the first year by taking you know because as you know those are what we call capbacks like everybody calls them capbacks.
Those are when you replace carpets or you’re redoing a roof or you’re redoing appliances those things they turn quickly. Um and uh and those you can all write off in the first year, right? Yep. Exactly. Yeah. Now, you know, you know what’s interesting when you talk about writing off? So, this is the good thing, right? I get that write off in year one, which is huge.
The bad part about it or kind of the the secondary thing is well then if you go to sell the asset because you’ve got all that depreciation you’ve taken, that depreciation is typically taxed at a higher rate, 25%. So when you go to sell the asset, you now have a whole bunch more capital gain that’s in that asset.
And that’s why you’re going to use the 1031 exchange on the back end. So you you kind of get the best of both worlds with this. That I guess that’s why I’m excited. You get all the depreciation in year one up front. Then when you go to dispose of the asset and upgrade, you do a 1031 exchange. Don’t pay any capital gain taxes at all. So, you defer all the different taxes that are out there, right? Capital gain, depreciation, recapture, state tax, and this pesky little thing called a net investment income tax. It’s a 3.8% tax.
All four of those, you don’t have to pay those taxes. Then you take all your equity and you pull it in, you roll it into a much larger replacement property to get even more cash flow. So, it’s a you win on both sides of it. That’s why I’m excited about these changes.
Now, we have a couple questions from YouTube that I want to ask. Uh, One Drop is asking, “When does the 100% bonus appre depreciation start to take place?” Great question. It’s effective this year. Anything purchased after January 20th, 2025 qualifies. So, we’re sitting here on July. Anything you purchased after the from the 20th on qualifies.
So, and anything you’re going to purchase going forward is also going to qualify and there’s no limitation with the current law now. There’s no restriction. So, we’re going to have this in 2025 and in 2026. So, it’s a permanent part of real estate planning which is huge. And then um Heath is asking is there a required certification for doing a cost segregation? Ah man. So certification.
So there is a group out there of cost segregation professionals. So there’s a trade association. There are a lot of providers that do cost segregation studies and I suspect and Kenya you might confirm this. I think we’re going to see that industry kind of explode overnight. There’s going to be more demand for that. But there are lots of different people and I I don’t remember the um the formal designation.
I want to say it’s AI something something cost segregation professionals. You probably want to look for somebody that has that designation. That means they’ve gone through some training and they’ve got that background. You know, not anybody can go into a building and do a cost segregation study.
So, they have to go on site and study it. Then they’re going to give you a report on your particular property, right? You’ll get your property broken out. Then you turn that report over to your CPA when you file your tax return and then they’ll use that data.
And if you ever get audited, you’re going to want a really good report to back you up in an audit showing why did you reclassify it. So I would say it’s important to find somebody that has that certification would be a good way to go. And there are a lot of great companies all around the company country that do this. And and one one thing uh Scott is we typically use a CPA firm uh that’s traditionally and then they usually have a whole slew of people that bid on it.
I’ve found that the the price for a cost set can be all over the map. So, I highly encourage you guys to really shop because it’s just like a property inspector where this to your point, Scott, this industry is probably going to blow up a little bit and you can pay a very very good price or you’re going to get people that are probably in the early stages could potentially uh be significantly above market. Yeah, a great great thought on that. I see the same thing, Ken. I see a big variance in pricing. So, you’d want
to call a couple providers and find out what their pricing is, how long they’ve been in the business, you know, kind of the due diligence you do with anything. But, yeah, shop it around a little bit. I when the the cost seg first came out, the prices were very high on a commercial building, people were paying 15, 20, 25,000.
The prices have come down a lot over time just because there are more people in the marketplace and that’s dropped the prices. So, I think we’ll see probably more people come into the cost seg marketplace, which means there’ll be more pressure on prices. Yep. And then uh so I know you’re going to be uh at Limitless first of all, by the way.
So, uh and you’re going to be doing a panel on this tax policy. So, Jerry, maybe you could put the Limitless uh piece up here. And I know um we’re we’re in the final days uh as you know, Scott, we’ve got um basically a few weeks left before Limitless. What are you gonna talk about the on the panel because you’ve got some pretty impressive people on that panel to talk about this tax bill and and more importantly how to take advantage of it.
Yeah, you know, I’m looking forward to that panel presentation and um just a huge plug for Limitless. I’ve been there as a participant before. It is a great event that you and Taro put together where you’ve got people talking about all sorts of different wealth strategies. That’s the cool thing about it. You’ve got everybody that’s there is looking to improve the rate of return.
They’re looking to network with other savvy investors on the panel. Um we’re going to we’ve got some really good people. We’ve got a CPA. We’ve got some other really good tax planning people. We’re going to unpack the highlights of this tax bill.
And so we’ve got a little less than an hour to hit all the highlights, but we’re going to be talking certainly about bonus depreciation. We’ll talk about opportunity zones and we may chat about that a little bit, which again that was added back into the bill. We’ll talk about the QBI qualified deduction of 20% and what that um is in there for.
That helps out real estate partnerships to reduce some of the taxable income. So, we really plan in that time period to hit on the highlights of the tax bill so that we’ve all got the benefit of that and can kind of go away from limitless with actionable strategies that people can implement.
You know, you’re going to have a lot of chatter about this and this tax bill is 940 pages, right? So, it covers spending, it covers immigration, it covers all these different topics. We’re going to zero in on what are the benefits for investors and real estate investors that are actionable that maybe you go you spend the money for Limitless and you get a lot back in tax savings that more than pays for the event.
You know that that would be the goal on our segment and I know you’ve got something like 50 other speakers talking about all sorts of other investment topics. So if you if anybody’s watching this you haven’t signed up for Limitless can’t recommend it. It’s the top tier event out there in the country.
Ken and Tar do a great job pulling the best of the best and everybody goes and they they really just share their knowledge. Nobody’s pitching from stage, which is cool. And then you get a network with them offline, which is another secondary benefit. Yeah. And they’re doing a webinar um that’s going to be Jerry if you can pull that up if you guys want to register.
It’s a great intro to understand what Limitless is going to be like and it’s free and we are excited uh to see you there. We have thousands of people signed up already for th this Thursday. It’s going to be fun. It’s kind of a a toe in the water, you know, on what we’re going to talk about at Limitless and talk about some of the speakers that we haven’t released yet. Awesome.
So, let’s hop back into the topic. So, Brian is challenging you a little, Scott. He said you could be forced back to pay back the write off if your business struggles or folds. Do you know anything about that? If your business Well, if you potentially could. So, any tax benefit.
And I know Ken and I, we talked about this at an event we were at, um, where people actually would have no equity, but they’d have a capital gain tax consequence, and they still would need to do an exchange. So, when the market tanked years ago and a lot of properties were going back to lenders, we had people that were giving back the property, but yet they still had a capital gain tax liability.
So, you certainly have to look, everybody’s going to have a different situation. So, if I could give anybody a tip would be we’re talking generally about the tax law. You’ve always got to review your specific tax situation with your tax advisor because, you know, there are people out there that qualify as a real estate professional.
That gives them other tax advantages that somebody who’s not a real estate professional won’t necessarily have. So, I’m not sure exactly what the the question was there on that one. You could have a tax benefit and if you have business problems, you still might have a capital gain tax liability that follows you. Yeah.
And and in that scenario, Scott, when I I was using a billboard purchase to offset um tax um I had later sold that billboard and then I had a recapture, you know, so I had to deal with that in my tax planning as well, but I wanted the the equity from the billboard and and you know, I paired it up with more uh bonus depreciation, ironically, to offset that again. But, uh, you know, if you have a business that you’re you’ve taken this huge tax win that you’ve gotten, um, and you lose the business and and you close the business, of course, the government’s going to say, you know, hey, you know, there’s a recapture uh that you know that you’re owed. It’s the same thing that happened in ’08. Um when I saw
people walk away from houses and they were so far under their loans u and they turned those houses back, they didn’t realize that they actually had um you know u a loss as well as the bank did um as part of that.
You know you can’t just buy something and then get the benefits and then then give it back without having some repercussions. So, um he is right. Uh you know, if if you have a failed business or you sell something, uh you’re going to have that uh come back at you, but you there are ways to work on that, too.
If you’re growing at the same time, starting new businesses, buying new properties, uh like we’re doing, uh you can you can take advantage of both. Yeah. Yeah. And you’re right. Back in that big downturn, so many people were giving properties back to lenders not realizing that they’re still on the hook for the capital gain taxes. I mean, we did a lot of no equity deals where literally there was no money being held by the qualified intermediary, but the investor because of the tax liability had a big incentive to go out and do an exchange, bring in new capital and buy a new asset. So a lot of times you you do and you’re taking advantage of things in the code. A lot of times
you kind of get on that train and you need to stay on the train and continue taking advantage of the code as you dispose of assets or wind down businesses. You might need something on the other side to offset it. So a perfect segue though to talk because I know a lot of uh people that sold their businesses and um and then they rolled that money into opportunity zones.
So, so this is a perfect segue for that because you know now you’ve got this uh whether it’s a recapture or whether it’s a big capital gain problem or whatever it might be um you can you can you can take some of these potential issues and roll them forward right into into these into this uh like op zone. Yeah. So an opportunity zone sometimes you’ll hear them called an OZ or an OP op zone.
This came back in the law back with tax cuts and jobs act. And the big purpose of it was to help a lot of poor areas to kind of attract capital, give some people some tax advantages to bring capital in these areas and do redevelopment and try and renovate these areas to bump them up.
The program was so successful, it brought in billions of dollars of capital that right now the program was kind of on a sunset where things were going to kind of wind down. They brought back opportunity zones, made them 100% permanent. So this is going to be huge. And the benefit of an opportunity zone is if you have any capital gain, let’s say you sell a business or you sell crypto or some other asset, you can use an opportunity zone and take advantage redeploy into these. And we’re going to see them actually expanded.
So they’re actually I think they designated something like 30% more new opportunity zones. So each state governor gets to look at their state and what they have now is they’re going to look for these poorer areas to attract capital. They designate them as an opportunity zone and then you’ve got an incentive to invest in those areas.
They tightened up the requirement a little bit. It used to be I think it was 80% of the median state income. Now these areas have to be 70%. Um in the past Ken some people said hey wait a minute that area that’s a nice part of town. Why is that designated an opportunity zone? So they they tighten it up a little bit.
So their areas you put your capital into the opportunity zone and you’ve got a tax benefit for doing that. And here’s the kicker. As you know, any gain you put the money in and you keep it there for 10 years. Any gain that happens after 10 years is 100% tax-free. So for those that are making a long-term investment, you’ve got a really big incentive to redevelop an area, hold on to that asset for the long term, and later on you sell it.
You now have something that is literally tax-free income in the code, which is huge for that long-term hold. Before we jump into how Ken’s using opportunity zones, we want to show you guys uh something from our sponsor, Monetary Metals. Gold is near all-time highs, but appreciation isn’t the only way to benefit. Monetary Metals, you could potentially earn a yield on your gold, paid in physical gold without selling it. Here’s how it works.
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comken to learn more. So, Ken, how are you using opportunity zones? So, one of the things that Veras and I, my partner, is that we’re actually going to be building um properties, the multifamily properties in these opportunity zones. So, uh, interestingly enough, by by, uh, doing a groundup development, we can exit properties that we have personally, um, and we can bring in new money if we want into and put them in this opportunity zone fund.
And so, what we saw last time, Scott, I would love for you to comment on this, is when the opportunity zone funds uh, well, first got introduced, people started putting these funds together. I had friends raising hundreds of millions of dollars. Um, you guys might not realize, but when people exit businesses and they have these huge cap gains or whatever it is they’re selling, they cap gains. I think maybe even gold.
Um, you you can roll that forward in this capital gain, you’re going to have to pay tax, but you can put them into these opportunity zones funds. They have to be deployed within a certain period of time. There are some regulations there, but maybe do you see a rise in these opportunities zone funds? Again, I again I think they’re going to you’re going to see them mushroom overnight because they’re so attractive.
So, it was interesting on the first round of these, we had some finite timelines where you were incentivized to get into them and you had to kind of get on that time schedule and get rolling. The way this became part of the law now, which frankly is really genius, is that this is continuous. So you now can have an opportunity zone and instead of being on a timeline where it’s going to begin to phase out if you don’t get your capital in these are now going to be a new tool, a new strategy going forward for everybody.
And and you correctly said it, any gain can go into an opportunity zone. So business, sell gold, collectible art, make a bunch of money on crypto and Bitcoin. So any capital gain can go into these opportunity zones. So they got rid of that timeline where they sunset and basically you now are just going to have these as part of the tax code permanently providing a great incentive.
So what you’re doing building a place and opportunity zone. It’s genius, right? Because you’re going to you’re going to provide a benefit for the community and give new construction, new real estate development. So you’re helping people out, right? And you’re going to improve a community and yet you and whoever’s involved in the deal with you is going to get a huge tax benefit.
It’s it’s to me social good combined with a tax incentive both working together. Well, and that’s kind of why we did it. We were hoping obviously that that they would extend this not knowing if they would, but um we we kind of got ahead of it and I think people, you know, if you’re trying to exit and you have a bunch of equity and stuff like we do, um and we want to recycle it from 80s and 90s product into brand new construction, uh which would be long-term holds that we would then set in probably our estates to be honest, um for the next
generation. These are great ways. These are great tax planning ways to do it. Yeah. No, it’s a it’s a great strategy. And one thing that’s in the new rules that came out, if you invest in an opportunity zone and have it there for at least 5 years, 10% of your gain goes away.
So, you get a little step up in basis. So, the government is giving you an incentive to invest long-term. Um, and you mentioned something there kind of in passing that I’ll just jump on and just mention it to the listeners watching this live stream. You talked about estates. We won big time on estate planning.
So we now have $15 million per person exempt from estate taxes. So your married couple that means $30 million of your estate won’t you won’t have to do any tax planning around that. So that for the majority of America, you know, most people are not going to have an estate over $30 million. We just simplified long-term tax planning for, you know, 99% plus of America, which is great. Yeah. And we can get into more of that at Limitless.
I I think uh we’re going to have estate people there that can walk you through it. It’s it’s over my head, even though I set one up, you know. Um there there is a process. Uh but but it is a heck of a nice thing to be able to take um you know assets that you have and put them into these uh state planning vehicles and let them grow um you know tax deferred I guess uh for the next uh generation. Yeah.
No de definitely and you’re right it’s complicated right there are different types of trust and different vehicles. You really need somebody pretty specialized helping you set up all these structures. It’s um long-term wealth planning, right? How do you take the wealth you built up and how do you most tax friendly way pass it on to the next generation so that they’ve got a head start? And it it’s it gets pretty complicated for sure.
So I think what’s really interesting about this bill is how much it rewards real estate investors in general, right? Because a lot of people listening, you know, maybe they’re considering investing in real estate or they haven’t done it yet, but you know, Ken always, you know, people get upset about tax codes around real estate investing, but what Ken always says is the government, you know, rewards where they want money to go, right? Because the government needs development, they need redevelopment, they need apartments, you know, all of those things. So, do you want to touch on that for those listening that are like considering investing or maybe just
started? Yeah, it’s a great point. You know, the tax code just fundamentally it’s really written by Congress to get social objectives. And so people in Congress know if you write the tax code where you provide incentives, capital, people that are smart are going to follow the tax code incentives that are put in place. So Congress wants to encourage real estate.
We need buildings. We need to renovate buildings. We need new houses. We need new affordable homes. We need all these different things. So the whole tax code in America is incentivized to encourage investing in real estate. It’s that way in 2025. It was that way 10 years ago, 40 years ago, 50 years ago. It’s always been like that.
So um I’m a real estate investor. So professionally, um you know, I do certain things with the tax code. And then personally, I’m an investor. Why? because I saw incentives in the code that reward real estate investing. So, I’m just going to take advantage of all of these different tax incentives that Congress put in place, take advantage of those and use them to build a real estate portfolio for myself and then to kind of do what you were doing mentioning Ken to pass it on to my heirs and my kids and build something up that I can kind of create some generational wealth. That’s the goal. So yeah, there are tons of advantages in
the tax code for real estate investors. You’re operating a real estate business. So if you do things properly, you get some of those benefits of operating a real estate business. And you know, one thing I’ll mention, you know, um I do a lot of single family homes.
You can have a real estate business with single family. So commercial when people think of business they think of apartments and multif family a lot of the types of assets can that you develop but you can start as a gateway and get in with a single family home or condos or short-term rentals and assemble a real estate portfolio that way and it still is a real estate business. So you get all of the benefits of that.
Writing off some of your home to operate your real estate business going for if you structure it properly a business trip where you evaluate your real estate invest investments and hold your annual meeting. So there are there are a ton of different tax incentives built into the code that reward real estate and you know certainly you can write off the the taxes and all the things.
And then we get into the more complicated ones like cost segregation and 1031 exchanges. Now you’ve got exit strategies there that make it really tax friendly. So I’m partial to real estate to you know stocks. You you’re turning your money over to Wall Street. You get a little return with real estate.
You now have all these other tax advantages available to you. You can play in a whole different game and really take control of your investments and your return with real estate. It’s really hard to do that with a index fund in Vanguard and then Wall Street’s still scraping off their fees off the top of it. So, sorry a little my bias came out. Oh, it’s great.
Scott, actually, I’ll tell you, it’s funny. Uh, obviously, we follow you. We get your email uh your newsletter. It’s fantastic. When I got it, I said the deal. Let’s try to get Scott on the on the uh on the live because this is all fresh and new. And obviously, I know you’re from the collective, our mastermind um for that as well.
But how do people reach you? Because I think this stuff can be overwhelming if you’re just putting your toe in the water. Uh but once you start to learn it, it’s really there’s just a few things you got to know, right? Yeah, there there absolutely is. And yeah, I I try to do a newsletter and have regular information going out.
Um yeah, people can get a hold of me. I’ll I’ll give my email. Hopefully it doesn’t blow up too bad, but I’m happy to add people to that. Um, it’s just scottapix.com is is probably an easy way to reach out. And you and I talked, I’m going to um create a PDF, a summary of the new tax law rules.