4 Considerations for Clients Investing in Real Estate

20 May 2021

The real estate market in many parts of the country has become a hot topic, especially as demand surges, but inventory remains low. With this in mind, it can be expected that financial professionals will be having client conversations around investing or selling real estate. Whether working with a first-time homebuyer or preparing an estate plan for an experienced real estate investor, it’s important to consider all factors before advising clients on how to approach real estate investments. Here are four key considerations to keep in mind:

Changes in Presidential Administration
The Biden administration was vocal about helping homebuyers and funding affordable housing initiatives on the campaign trail. Changes related to the SALT cap and 1031 Exchange, if passed, could significantly impact your clients.

Leveraging Real Estate Transactions to Minimize Taxes
Clients can avoid significant tax consequences when buying and selling properties, if they plan correctly. Tax write-offs, property depreciation, and contributing to tax-deferred retirement accounts are all ways to help clients minimize their tax burden.

Planning Ahead with Detailed Exit Strategies
For clients looking to maximize profits and limit risks associated with real estate investments, it’s important to plan ahead. Engaging with clients early in the decision-making process and ensuring they are fully informed of all their options, can help them avoid costly mistakes down the road.

Embracing the Estate Planning Process
Having proactive conversations around succession and estate planning, can be difficult, but is extremely important to help clients avoid legal and financial headaches with the passing of a family member.

Our latest article, 4 Considerations When Creating Financial Plans for Clients Investing in Real Estate, explores these topics in greater detail and provides a great overview when preparing for conversations where real estate transactions could have major implications on financial recommendations. Download the full article now.