Real estate investment loopholes book disappoints
Authors provide too few specifics

Tuesday, May 24, 2021

By Robert J. Bruss
Inman News

Don't be misled by the title of "The Insider's Guide to Real Estate Investing Loopholes" by Diane Kennedy, CPA, and Dolf de Roos. The book is mostly about income-tax loopholes for real estate investors.

That's fine. But the authors have created a very basic realty investment book with a catchy title. If you are brand new to realty investing, you will benefit from exposure to extremely simplistic explanations of tax deductions for investors.

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However, the book never refers to the sources for the often sweeping statements. Co-author Diane Kennedy should know better than to explain tax implications without referring to her sources, such as a tax law or court decision. Vague generalities are insufficient.

For example, in the chapter about how to hold title to investment properties, the statements are very vague without sources to support the generalities. However, this chapter contains an excellent two-page chart comparing C and S corporations, limited partnerships, and limited liability companies (LLC) for holding title.

Occasionally, the authors lapse into brilliance. For example, in the section about how to hold title, they advise: "However, if you use a combination of a trust and an LLC, you can have the best of both worlds. Instead of having the trust owned by its beneficiaries, have the trust owned by an LLC that is in turn owned by the beneficiaries. Now, if there is a lawsuit, either against the trust or against a beneficiary, the LLC asset protection rules come into play."

Kennedy and de Roos often provide very practical advice such as, "In fact, perhaps the worst thing you can do is to make extra principal payments on your loan. The extra payments don't help you if you miss a payment; the bank just gets more equity if they foreclose. Additionally, you've relinquished the financial boon of leverage."

If you expect authoritative tax information on how to avoid paying tax on your realty investment property sale, don't waste your money on this superficial book. This "baby book" provides only minimal information for serious real estate investors.

The final chapter, titled "Global Investing," provides the worst information of all the chapters. The authors recommend real estate investing in foreign counties, completely neglecting to explain the tax aspects and the currency conversion risks.

Chapter topics include "Choose the Tax Laws You Want"; "Tax Traps to Avoid"; "Turing a Loss into an Asset"; "Smart Business Structures That Reduce Risk and Tax"; "Titling Property: Tenancies, Trusts, and Transfers"; "Clever Use of Debt"; "Sell Your Property without Immediately Paying Tax"; "Exit Strategies"; "Be Paid to Live in Your Home"; "Vacation Property"; and "Creative Ways to Put Money into Your Pocket."

If you are a beginner real estate investor looking for extremely simple information about the tax benefits of realty investments, you can benefit from learning the book's basic tax rules. However, if you already understand the basic realty tax rules, you will be very disappointed with this "baby book." On my scale of one to 10, this very basic book rates only a five.

"The Insider's Guide to Real Estate Investing Loopholes," by Diane Kennedy and Dolf de Roos (John Wiley and Sons, Hoboken, N.J.), 2005, $16.95, 214 pages; Available in stock or by special order at local bookstores, public libraries, and

(For more information on Bob Bruss publications, visit his
Real Estate Center).


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Copyright 2005 Inman News


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