tax efficiency and preservation of capital avoid the storm

Given all the uncertainty surrounding the 2020 election and the recent flurry of election lawsuits alleging massive and systemic voter fraud, the official outcome of the Presidency will not truly be known for months. The Senate race is also in limbo due to the Georgia run off that may not be known until January 2021. Clearly, the United States requires major election process overhaul in order to protect our single most important freedom.  Our vote!! 

However, one very real certainty is that taxes are going to increase no matter who eventually wins the White House.  The United States national debt has recently exceeded our gross domestic product. Our Federal government continues to spend beyond its means under the guise of “modern monetary theory.”

The fiscal reality is the federal government does not have the money to pay for its entitlement programs, bailouts and addiction to stimulus spending. By artificially keeping interest rates at all-time lows, the Federal reserve is creating massive bubbles in the stock market and residential real estate.

What can you do to take safe harbor from the coming storm? 

1. Preservation of Capital

Recently, we have been watching a fiscal chart called the Buffet Indicator.  Essentially, this indicator tracks the total US stock market valuation relative to the total GDP of the US. 

According to Current Market Valuation, this indicator is currently 65% higher than the historical average, suggesting that the market is Strongly Overvalued. If this indicator is correct, a major market correction might be coming soon and shifting into a stable asset class such as health care real estate would be recommended. 

Buffet Indicator Value vs Historical Trend

2. Tax Efficiency

Without breaking any laws, lowering your marginal tax rate without lowering your income is not an easy task. 

Health care real estate provides some major tax efficiencies by way of a tax tool called a cost segregation study. This legal accounting method allows the owner of a building to accelerate depreciation on different parts of the building per the IRS tax code. 

We recently highlighted a medical office building acquisition in which we were able to generate a $1 million dollar paper loss and pass through to our investors. 

Preservation of capital and tax efficiency should be front of mind for all investors, especially now.  

The warning signs are out there, you just have to know where to look.  

Recentric Realty Capital

Recentric continues to look for development and acquisition opportunities to meet the growing demand for larger, out-patient medical facilities. This strategy allows us to take advantage of the growing need for these facilities and offer new and exciting opportunities to our current and future investors.