WHAT IS A REAL ESTATE PROFESSIONAL?

PART III OF III… THE END...

The last thing that I will bring up is that the economy and Real Estate are on a roller coaster ride as it has been since the beginning of time. If the interest rates go down, the economy flourishes. If the interest rates go up, substantially, the economy will slow down, and the Real Estate market could go stagnant. The seasoned Real Estate Professional has the resources and the knowledge to ride this roller coaster to the end. The novice might just be hurt.

I have said here more than a number of times do not change your life or lifestyle just to save income taxes. Even though my whole professional career, well over 50 years, was spent saving my clients income taxes I didn’t EVER believe that you should change your lifestyle, professions, circumstances “just” to save income taxes. Well, the expression is that you live and learn or maybe our focus changes or circumstances arise where you decide to change the rules for one specific client, or maybe two.

My partner, Fred Sams, and I have talked to a couple in the Midwest , both physicians, who make a LOT of money and it’s all W – 2 income. Not being Real Estate Professionals, their loss is limited to $25,000 a year, as I have already stated. I am really thinking that one of them should start to practice medicine for four days a week and then three days a week and then do whatever it takes to change their status to be a Real Estate Professional because their goal, I said THEIR GOAL, is to save as much income taxes as possible and build cash flow, appreciation and get wonderful income tax benefits through Real Estate.

So, in this case, I am breaking my own rule. I have already discussed this concept with them. They may change their lifetime professions to save income taxes. Based on their goals, which I will go over and over again with them when we are face to face, I may suggest that they do this. Honestly, this is a very hard decision for me, and I feel VERY guilty about this!!! Let’s see what happens.

But now, something that will surprise so many of you. I watch "Law and Order" and "Blue Bloods" just about every day. And I learned that if the SUPREME COURT OF THE UNITED STATES makes a ruling that all of the attorneys MUST treat that as LAW. There is one exception. The Internal Revenue Service can be sued and lose in the US Supreme Court and NOT ACQUESE to the decision. That means that if the Court says that a certain deduction CAN be taken because a taxpayer sues the IRS and it goes all the way to the Supreme Court, the IRS can say, fine, but we will continue to disallow that deduction to everyone else who takes that deduction in the future and, if you don't like it, you can sue us, and spend soooo much money, all the way to the Supreme Court where we will lose!!! That is arrogance and just plain wrong, but it's true. If you want, write your Congressmen and Senators about this because it's WRONG!!!

There are other advantages of “only” being a real estate investor, but I don’t have the time or the space to list them here. If you would like more information, please contact me at (818) 298 – 4000 after 10 AM Pacific Time and, yes, that’s 7 days a week. But PLEASE do not call me when Notre Dame is playing football on TV. Or you can send an email to me at [email protected] anytime and I will always try to get back to you in a timely manner.