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#85 - How Real Estate Investors Use the Tax Code to Keep More Cash with Dave Foster
Manage episode 479057058 series 3511422
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In this episode, Steven Arita sits down once again with Dave Foster, a longtime real estate investor and tax expert, for another high-energy, no-fluff conversation about how to use the tax code to your advantage. Dave breaks down why the tax system is built to reward certain behaviors, like owning rental property or reinvesting through 1031 exchanges, and how understanding that can completely change the way you approach investing.
They get into the good stuff: depreciation, cost segregation, bonus depreciation, and how tools like Section 179 can unlock serious tax savings—not just for real estate, but for other business investments too. Dave also shares how refinancing, capital expenditures, and even living in your investment property can open up smart tax strategies that most people miss.
The conversation is full of real talk and practical tips, whether you're just getting started in real estate or looking for ways to reduce your tax bill as a high-income earner. They even touch on hidden gems like investing in U.S. territories such as the Virgin Islands. If you've ever wondered how the wealthy legally pay less in taxes, this episode is packed with answers.
Connect with Dave:
https://www.the1031investor.com/
Check out these blog posts:
https://www.the1031investor.com/1031-exchanges-and-conversion-into-a-primary-residence/
https://www.the1031investor.com/why-you-should-rent-not-sell-your-home/
https://www.the1031investor.com/1031-exchange-the-most-important-thing-to-know/
https://www.the1031investor.com/lifetime-tax-free-wealth-book/
Episode highlights:
(0:00) Intro
(1:15) How the wealthy use the tax code
(4:09) What is tax and tax code?
(8:02) What is a 1031 exchange and why it works
(14:23) Dave’s background and the CPA distinction
(18:32) Depreciation and its pros and cons explained
(25:39) The Section 179 deduction
(30:17) Cost segregation and bonus depreciation
(39:57) What expenses are tax deductibles?
(44:01) How to think about CapEx
(50:49) Using properties to refinance and reinvest
(53:08) Understanding IRR
(1:03:24) Real estate vs W-2 income
(1:05:13) Teaser: 1031 into the U.S. Virgin Islands
(1:07:43) Outro
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For more resources and guides, check these out:
- Investor 101 https://www.aritacapital.com/investor-101-resource/#
- Due Diligence Resource https://www.aritacapital.com/dd-checklist-resource/
If you want to learn more, reach out at:
Email: [email protected]
LinkedIn: https://www.linkedin.com/in/aritasteven/
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