Real estate is a great tool to shelter wealth. 1031 exchanges, interest write offs, depreciation. People who are not designated "real estate professionals" or without passive income (being subject to passive loss limitations) cannot benefit as significantly as wealthy people with passive income.
I want to start a fund that would be a component of wealthy peoples estate planning. It would build wealth with limited tax liability or even some passive loss to offset their other passive income.
Am I missing something? Can anybody tell me what walls I will run into down this road? (If done correctly the IRS is fine with it, so dont give me that one)
If you're an experienced tax attorney with a golden network of clueless hnw individuals begging to give you money then no, you aren't missing anything.
The only thing you would run into is competition. The funds that specialize in this are in the hundreds or thousands.
As an accountant you're fine on the IRS side, I'd be interested in talking about this privately DM me
Do you have a lot of experience with 1031 exchanges? I'm looking to get more involved in this method particularly and looking for some guidance.
Any questions in particular?
Is it common for institutional investors to engage in it, or is it something that's geared toward smaller scale investors?
To an extent this is advised by most accountants already in a slightly different form. Lots of people own expensive 2nd & 3rd homes and they rent them to claim depreciation and write off the taxes, insurance, maintenance, etc. On any kind of higher end luxury rental you're generally taking a net loss anyways.
Even just buying a poorly performing run-of-the-mill rental can benefit someone in a high bracket.
I see what you are getting at though, clearly looking for really big fish where buying a couple multi million $ rentals doesn't move the needle.
Doesn’t benefit salary income at all
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