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As commercial real estate portfolios grow, the conversation eventually becomes about more than buying the next property.
At some point, you have to think about how much of that wealth you are actually keeping, how your assets are structured, and what happens to them in the future.
Taxes are a big part of that conversation. Real estate gives investors access to strategies like depreciation, which can help offset taxable income even while a property is producing cash flow.
For larger commercial properties or portfolios, some investors also use cost segregation to accelerate certain depreciation benefits.
Then there are 1031 exchanges, which I have seen become an important part of long-term portfolio growth. Instead of selling a property, paying the capital gains tax, and then reinvesting what is left, an investor may be able to defer those taxes by moving into another qualifying property.
The timing and requirements matter, so this is one of those strategies where having the right professionals involved is important.
Estate planning becomes another consideration as the portfolio gets larger.
Trusts, LLCs, family partnerships, and other structures can help investors think through how properties will be managed, protected, and eventually transferred. For some families, the bigger question is not simply who inherits the commercial real estate, but who is prepared to manage it.
I think that part is easy to overlook.
A property portfolio may have taken decades to build, but without a clear succession plan, the next generation can inherit assets without having a plan for what to do with them.
Charitable giving, insurance, and other planning tools can also become part of the strategy depending on the investor’s goals.
This is where I think having a good team around you really matters. Your accountant, attorney, financial advisor, and commercial real estate professionals should understand what you are trying to accomplish so the different parts of the strategy work together.
Building wealth is one part of the process.
Making sure that wealth is protected, managed properly, and positioned for the next generation is another.
I’d love your perspective on this! Leave your comments below, or connect with me on Instagram!
xoxo,
Cyn
