Why the Tax Code is an Incentive Plan with Larry Pendleton, Ep. 270

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Once again, tax season has returned and this year adds even more complex due to COVID, CARES Act, and other relief efforts. For multifamily investors, apartments offer a tax shelter that allows them to reduce their tax liability. Some see this as a loophole, with President Biden claiming to close certain provisions. Others, like Larry Pendleton, view the tax code as an incentive plan to reward investors, developers, and others that provide quality housing for the public.

Larry is a real estate investor and CPA with a passion for adding value to fellow investors through tax consulting and accounting services. He is the co-founder of PC Financial Services and the Director of Finance for Rize Equity Holdings. As an investor and CPA, Larry understands the tax advantages of investing in apartments.

Larry shares how the tax code is an incentive plan and why it’s important to find a CPA that shares this view and is willing to help you take advantage of the code, not just make your filing easy. We discuss implications from the CARES Act, how paper losses work for your benefit, and policy discussions that could have a future impact.

Partner: Text: “EQRP” to 72000 and receive a special eQRP report on taking control of your retirement money

Key Insights

  • Why Larry believes and works under the belief that tax codes are an incentive plan
  • CPA vs. Accountant: Know the differences

Think of CPAs and Accountants like doctors, they are in the same field (financial) but specialize in different areas

  • Why you need a financial advisor that specializes in real estate
  • Understanding the many different tax advantages of being a real estate investor
  • What type of real estate investors benefit the most from cost segregation, bonus depreciation
  • Making losses work for your tax benefit
  • Understanding passive and non-passive investing losses
  • Helping investors and business owners with their 2020 taxes in regards to The Cares Act, PPE Loans, and new legislation

Part of the tax-cutting jobs act was the bonus depreciation of going from 50% to 100% for any asset that depreciates less than 20 years.

  • Policy changes under a Biden Administration that may affect real estate investing
  • Step-Up Basis (capital gains taxes) and the 1031 exchange (swap of one investment property for another that allows capital gains taxes to be deferred) may be on the chopping block
  • How to find the best tax strategist for your real estate investing business

The tax tail should not be wagging the investment dog.

  • How your tax advisor should be an asset to your business not just an investment

Partner: Download our Sample Deal Package

Bullseye Round:

Apparent Failure:I tried to do my first flip by myself and was not utilizing the people around me to balance out my weaknesses. The experience taught me to recognize my weaknesses and leverage the skills of my partners.

Digital Resource:

Calendly

Most Recommended Book:

Who Not How: The Formula to Achieve Bigger Goals Through Accelerating Teamwork (Dan Sullivan)

Daily Habit:

5 - 10 morning meditation and workout

Current Curiosity:

Where the country is going from a societal standpoint

Wish I Knew When I Was Starting Out:

That I don’t have to do it by myself.

Best Place to Grab a Bite in Norfolk, Virginia

Croaker’s Spot

Get in Touch with Larry:

@larrypendelton

757-535-8592

295 episodes