Real Estate Tax Strategies w/Tyson Cobb
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Episode Description
Welcome to the Freedom Point Real Estate podcast! Today's guest, Tyson Cobb, shares his journey from orthopedic surgery to full-time real estate investing, offering valuable insights into tax strategies, triple-net leases, networking, and more.
Dr. Tyson Cobb, a semi-retired orthopedic surgeon, has over 40 years of investing experience, shifting from stocks to real estate for greater stability. With over $1B in commercial assets, he invests in multifamily housing, commercial properties, and more. While practicing surgery one day a week, he focuses on underwriting top-tier real estate deals and partnering with investors. Committed to financial freedom and philanthropy, he also supports charitable causes.
CONNECT WITH TYSON COBB!
LinkedIn: https://www.linkedin.com/in/tysoncobbmd/
Website: https://timberviewcapital.com/
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Use Depreciation to Offset Passive Income
"Everything that's in your passive bucket, you can offset with depreciation."
Depreciation is a powerful tool in real estate investing that allows investors to reduce taxable income while still generating cash flow. By strategically leveraging depreciation, investors can legally lower their tax burden, making their real estate investments even more profitable. Understanding how to apply these deductions effectively requires working with a knowledgeable CPA who specializes in real estate taxation.
Tip #2: Consider a Discounted Roth Rollover for Tax Savings
"You can do what’s called a discounted Roth rollover... it creates a discount on paper."
A discounted Roth rollover allows investors to transfer funds into a Roth IRA at a lower taxable value, reducing the upfront tax liability. This strategy involves investing in a long-term asset that decreases in liquidity and valuation before the rollover, minimizing tax exposure. While the IRS has strict rules regarding valuations, having an expert oversee the process can ensure compliance and maximize long-term tax-free growth.
Tip #3: Plan for Tax-Efficient Withdrawals in Retirement
"If it's still in a self-directed account, you have to pay taxes on it when you take it out."
Understanding tax implications when withdrawing retirement funds is critical to maintaining wealth. While traditional retirement accounts grow tax-deferred, Roth IRAs provide tax-free withdrawals, making them a preferable option for long-term growth. Investors should weigh the impact of taxation on their future withdrawals and plan accordingly to optimize their retirement income.
Tip #4: High-Earners Should Consider Real Estate for Passive Income
"That high-income individual... maybe that busy professional... what advice would you have?"
Many high-income professionals feel trapped in their demanding careers and seek alternatives for financial freedom. Real estate offers a viable path to replacing earned income with passive cash flow, reducing reliance on stressful day jobs. By strategically investing in multifamily properties or syndications, professionals can transition into financial independence while still maintaining career flexibility.
Tip #5: Step-Down Retirement is a Game-Changer
"When you go to part-time work and you're doing it at your own design, it is so much more fun."
Rather than fully retiring, many professionals find greater fulfillment by scaling back to part-time work. This approach allows for financial stability while reducing work-related stress and maintaining purpose. Real estate investing can provide the supplemental income needed to make this transition smoother, enabling individuals to design a lifestyle they truly enjoy.
Tip #6: Join a Network of Like-Minded Investors
"Join groups... you need to be part of a network."
Networking is essential in real estate investing, providing access to deals, mentors, and industry insights. Being part of a community allows investors to learn from others' experiences, avoid common pitfalls, and find trustworthy partners. Whether through online forums, local meetups, or masterminds, surrounding yourself with experienced investors can accelerate success.
Tip #7: Work with a CPA Who Specializes in Real Estate
"Most CPAs only do tax returns... you need one that will give you direction."
Not all CPAs understand the complexities of real estate taxation, making it crucial to find one who does. A real estate-focused CPA can provide strategic tax planning, ensure compliance, and uncover potential deductions. Having both a tax preparer and a separate tax strategist can be a winning combination for maximizing savings.
Tip #8: Take Your Time Vetting Deals
"When I first started, it was hard to find good deals... now, there are discounts out there."
With economic cycles affecting the market, investors should carefully analyze potential deals rather than rushing in. Due diligence includes reviewing market trends, underwriting financials, and assessing sponsor track records. Patience and thorough research can lead to significantly better investment opportunities.
Tip #9: Leverage Interest Rate Cycles to Your Advantage
"Because of what the feds have done with interest rates, there are good discounts now."
Economic fluctuations create opportunities for savvy investors who understand interest rate trends. When rates are high, fewer buyers are in the market, allowing disciplined investors to secure properties at a discount. Being prepared to act when market conditions shift can lead to substantial long-term gains.
Tip #10: Build Wealth for a Purpose Beyond Yourself
"My big goal is to put a portfolio together that will crank out a million dollars a year for charity."
Wealth-building isn’t just about personal gain—it can be a tool for making a meaningful impact. Investors who achieve financial freedom often shift their focus to philanthropy, supporting causes they care about. Having a greater purpose behind wealth accumulation can drive motivation and create a lasting legacy.
