In today’s Living Akamai, Troy Wada, Principal Wealth Advisor at INPAC Wealth Solutions, joined Kay Mukaigawa, from Engel and Volkers Honolulu, to share insights on tax challenges faced by retired real estate investors.
Kay addressed a common concern among retired investors who find themselves paying more taxes on investment properties than during their working years. Troy highlights a commonly overlooked aspect – “Depreciation.” Many landlords witness a tax increase after around 28 years of property ownership due to the cessation of the depreciation tax benefit.
Coupled with this tax dilemma, landlords grow weary of property management and maintenance. When contemplating selling the property, they face another issue – substantial Capital Gains taxes. This compound effect leaves investors paying more taxes, considering selling, but struggling with the tax implications.
Kay and Troy discuss additional concerns, emphasizing proper estate planning. Real estate and non-retirement accounts, when titled correctly, can be ideal assets for beneficiaries due to the favorable “Step-up in Cost Basis.”
Troy offers two key tips: maximize depreciation tax credits on rentals and consider a 1031 Exchange to swap properties, avoiding hefty capital gains taxes. The conversation shifts to a specialized solution – the Delaware Statutory Trust (DST). Accredited investors can invest in a DST, allowing up to 500 accredited investors to pool resources for like-kind property purchases. This approach enables investors to defer 100% of taxes on the sale of their current property while avoiding day-to-day management hassles.
For those interested in attending a seminar, call 808-725-2000.
Let Engel and Volkers Honolulu help you “Live Akamai”.
