How Real Estate Helps you Keep More

"It's not about how much money you make, but how much you keep." – Robert Kiyosaki

Let’s be real: most of us are working hard to earn more—but what if the secret to growing your wealth isn’t just earning, but also saving on taxes?

That’s where real estate comes in.

When you invest strategically in real estate, the tax code actually works in your favor. Passive investors in multifamily properties can benefit from a range of tax advantages that help grow wealth faster—and with more protection than many traditional investments offer.

In this article, we’ll break down the key tax benefits you get from investing in real estate, especially through passive vehicles like multifamily syndications. Spoiler alert: It’s one of the most powerful tools to accelerate your journey to financial freedom.

** Not Tax Advice! Please seek a CPA for tax advice. 

Depreciation: A Paper Loss with Real Impact

One of the most significant tax benefits in real estate is depreciation—a non-cash deduction that reduces your taxable income.

Even though your property is likely appreciating in value over time, the IRS allows you to “depreciate” it over 27.5 years (for residential property). This means you can deduct a portion of the property's value every year—even if you're making more money!

This deduction can help offset rental income, so you're keeping more profits while showing less taxable income on paper.

Bonus tip: Through cost segregation and bonus depreciation, many multifamily investments front-load these deductions in the early years—maximizing your tax savings even faster.

1031 Exchange: Defer Taxes and Scale Your Portfolio

If you sell a property and make a profit, normally you’d owe capital gains tax. But with a 1031 exchange, you can defer that tax by reinvesting your gains into another like-kind real estate asset.

This allows investors to upgrade to larger properties (and increase cash flow) without taking a tax hit.

You’re essentially kicking the tax can down the road—potentially for decades—while building wealth and compounding your returns.

Note: While 1031 exchanges are typically used for direct property owners, some real estate funds or syndications may roll over assets to continue this benefit.

Tax-Deferred or Tax-Free Accounts: Supercharge with IRAs

Did you know you can invest passively in real estate using your self-directed IRA (SDIRA) or Solo 401(k)?

When you invest through these vehicles, your returns are either:

• Tax-deferred (traditional SDIRA/Solo 401k),

  or
  

• Tax-free (Roth accounts)
  

  It’s a way to grow your retirement wealth without Uncle Sam taking a bite each year.

Passive Losses Can Offset Passive Income

When you invest in real estate passively (like in a multifamily syndication), your share of the property's depreciation, interest, and other costs can create passive losses.

Even though the investment is generating positive cash flow, these "losses" can offset other passive income—including income from other rental properties or business activities where you're not materially involved.

It helps you reduce your overall tax liability and preserve more of your cash flow—again, without lifting a finger.

Opportunity Zones: Long-Term Tax Incentives

Some investors are taking advantage of Qualified Opportunity Zones, which allow you to defer or even eliminate capital gains taxes by investing in specific designated areas.

While not for everyone, these are powerful tools for high-net-worth individuals looking for strategic tax sheltering.

Practical Recommendations

Here’s how to start using these tax advantages to your benefit:

• Speak with a CPA who understands real estate to explore how these deductions could impact your tax return.
  

• Join a multifamily syndication that offers cost segregation studies and passes depreciation benefits to investors.
  

• Consider using your SDIRA to fund your next passive deal tax-deferred.
  

• Ask about 1031 options when exiting investments—your wealth deserves to keep growing.

Summary: Your Shortcut to Smarter Wealth

Taxes are often our biggest expense—but they don’t have to be.

By strategically investing in real estate, especially through passive vehicles like multifamily syndications, you can use the tax code to your advantage. These aren’t loopholes—they’re intentional incentives to reward long-term, responsible investing.

When you combine passive income with smart tax strategy, you get one step closer to the ultimate goal: freedom—of time, money, and lifestyle.