Real Investor Radio

Episode 30 | Douglas Stein Part 2 – Changes In Tax Law in 2024

January 25, 2024

Episode Summary:

Craig and Jack continue their conversation with Tax Attorney Douglas Stein of Stein Law. The conversation covers various changes and updates in tax laws and strategies for real estate investors. The topics include changes to bonus depreciation, the impact of cost segregation studies, modifications in captive insurance companies, changes in estate tax exemptions, transparency and disclosures for trusts, updates on qualified opportunity zones, and the workforce housing tax credit. The conversation explores various themes related to affordable housing and tax policies. It discusses the polarization and bipartisan support surrounding affordable housing initiatives. To learn more about Doug, visit his website at https://www.steinlawllc.com/

Overview of Episode 30

In this episode, Craig Fuhr and Jack BeVier continue their conversation with attorney Doug Stein. They cover changes in tax law affecting real estate investors and discuss upcoming modifications in 2024 and 2026. These adjustments in tax policies will impact both personal and business strategies for real estate investors.

Key Changes in Bonus Depreciation

Bonus depreciation, which allowed investors to deduct substantial amounts, has started to phase out. In 2023, the deduction dropped from 100% to 80%, and it will fall to 60% in 2024. Investors should prepare for continued decreases, with a full phase-out scheduled within three years. Consequently, this change could influence real estate investment strategies.

Changes in Tax Law for Estate Tax

The estate tax exemption increased to $13.8 million for 2024, allowing significant wealth transfer without tax implications. However, in 2026, this exemption may return to lower levels, impacting long-term estate planning. Investors should consider planning adjustments to make the most of this exemption while it lasts.

Changes in Qualified Opportunity Zones

Qualified Opportunity Zones (QOZ) also face new deadlines. Investors who deferred capital gains by investing in QOZ properties will need to pay those taxes by 2026. As a result, investors should evaluate their cash flow to ensure they can cover these impending liabilities.

Captive Insurance and Compliance Issues

Captive insurance structures, designed to reduce risk, have faced IRS scrutiny. Proper documentation and compliance are critical to avoid audits. Investors should be cautious with this strategy due to increased regulatory attention.

Closing Thoughts on Tax Law Evolution

Changes in tax law will significantly affect real estate strategies. Accordingly, investors are encouraged to stay informed and consult with tax professionals to navigate these evolving regulations successfully.