When purchasing a new property investors typically use asset depreciation to offset tax liability. Depreciation allows investors to reduce taxable income derived from the property by reducing the asset’s value by accounting for natural wear and tear. To calculate the amount of depreciation an owner can take annually: take the purchase price minus the land value and divide by 27.5 years (its useful life). This deduction can significantly boost cash flow over time. However, if this property is sold for more than its adjusted basis, investors face depreciation recapture, a tax on the previously claimed depreciation.

Understanding how depreciation recapture works is essential for maximizing profits and minimizing tax liability. In this article, we’ll explain depreciation recapture, how it impacts multifamily investors, and strategies to manage it effectively.

What Is Depreciation Recapture?

Depreciation recapture is a tax provision that applies when an investor sells a property for more than its adjusted basis—the original purchase price minus accumulated depreciation. During ownership, investors typically use depreciation to lower their taxable income by deducting the property’s wear and tear, which increases cash flow and overall returns. However, when the property is sold at a gain, the IRS “recaptures” those tax savings by taxing the depreciated amount, typically at a higher rate than long-term capital gains. Savvy investors take advantage by strategically timing property sales, using 1031 exchanges to defer taxes, or reinvesting gains into higher-yielding assets. 

How Does Depreciation Benefit Real Estate Investors?

Depreciation is a powerful tax deduction that allows real estate investors to lower their taxable income. Multifamily property investors can offset rental income by deducting a portion of the property’s value each year, significantly reducing their overall tax burden. For example, if an investor has a multifamily property valued at $2 million, they can depreciate the building (excluding land) over 27.5 years, resulting in substantial annual deductions. In multifamily syndications and private equity investments, these depreciation benefits are passed through to investors, allowing them to enjoy tax-advantaged cash flow while building long-term wealth. This strategy preserves more income and enhances overall investment returns. 

When Does Depreciation Recapture Apply?

The IRS reclaims some of the tax benefits previously received by investors through depreciation deductions. In multifamily syndications, investors face depreciation recapture when the partnership sells the property and distributes profits. The recaptured amount is taxed like regular income up to the total depreciation claimed, while any extra profit is taxed at the capital gains rates. Key thresholds for triggering recapture depend on the property’s sale price, depreciation taken, and any improvements made, making strategic planning essential to minimize tax liability.

What Triggers Depreciation Recapture?

Key thresholds that trigger depreciation recapture are primarily based on the difference between a property’s sale price and its adjusted basis. Specifically, depreciation recapture is triggered when:

1. Sale Price Exceeds Adjusted Basis:
   If a property is sold for more than its adjusted basis (original purchase price + capital improvements − accumulated depreciation), the IRS requires investors to “recapture” the depreciation deductions previously taken.
2. Amount of Depreciation Claimed:
   The total depreciation deducted over the holding period directly impacts the amount subject to recapture. The IRS taxes this portion as ordinary income (up to a maximum rate of 25%) rather than the lower capital gains rate.
3. Capital Improvements vs. Maintenance:
   Significant capital improvements (e.g., adding new units or major renovations) increase the adjusted basis and can reduce the amount subject to recapture. Routine maintenance does not impact the adjusted basis.
4. Property Type Classification:
   For residential rental properties (like multifamily real estate), the IRS uses a 27.5-year depreciation schedule. The longer a property is held, the more depreciation is claimed, increasing potential recapture.
5. Ownership Structure:
   In multifamily syndications, when the partnership sells the property, the recapture amount is passed through to individual investors based on their ownership share. This can lead to higher personal tax obligations upon sale.

By understanding these thresholds, investors can strategically plan for sales, reinvestment, or tax deferral strategies like a 1031 exchange to minimize depreciation recapture taxes.

How to Calculate Depreciation Recapture

Calculating depreciation recapture involves a clear, step-by-step process that ensures investors understand their tax liability when selling a property. First, determine the adjusted basis by subtracting the total depreciation claimed from the original purchase price plus any capital improvements. Next, subtract the adjusted basis from the property’s sale price to identify the total gain. The portion of the gain equal to the depreciation claimed is taxed as ordinary income (up to 25%), while any remaining gain is taxed at the capital gains rate. 

Break Down of the Above Example

If a person invests $ 1.5 million into a multifamily property, claims $200,000 in depreciation, and sells it for $1.5 million, the adjusted basis would be $800,000 ($1 million – $200,000). The total gain is $700,000 ($1.5 million – $800,000), with $200,000 taxed as depreciation recapture and the remaining $500,000 taxed at the capital gains rate. This calculation is essential for investors to accurately anticipate tax obligations and plan profitable exit strategies.

Tax Implications of Depreciation Recapture

Understanding depreciation recapture is crucial for multifamily investors aiming to maximize their returns. While long-term capital gains are typically taxed at lower rates (0%, 15%, or 20% based on income), depreciation recapture can be taxed at higher rates capped at 25% in 2024 and 2025. The IRS classifies the portion of profit related to depreciation as “unrecaptured Section 1250 gain.” If straight-line depreciation was applied during ownership, this gain wouldn’t be taxed as ordinary income but is subject to the Section 1250 tax rate. When a multifamily property sells for more than its adjusted basis, investors must repay the tax benefits received from depreciation deductions. For syndication investors, this tax obligation can significantly influence overall profits.

For instance, if an investor claimed $200,000 in depreciation, like in the above example, and later sold the property for a profit, that $200,000 would be taxed at the higher recapture rate, reducing the net gain. Understanding these tax rules allows investors to plan strategically, potentially using tools like 1031 exchanges to defer taxes and reinvest in higher-performing assets, ultimately protecting and growing their wealth.

Strategies to Minimize Depreciation Recapture

Investors can actively minimize depreciation recapture taxes in multifamily real estate by leveraging several strategic approaches:

• 1031 Exchange: Defer taxes by reinvesting proceeds from a property sale into a like-kind property, allowing investors to preserve capital and continue growing their portfolio.
• Cost Segregation Study: Accelerate depreciation by identifying and reclassifying specific property components (e.g., appliances, fixtures) for faster write-offs, reducing taxable income in the early years.
• Long-Term Ownership: Lower depreciation recapture liability by holding properties longer, spreading out depreciation benefits, and capitalizing on long-term property appreciation.

By combining these strategies, investors can protect their returns, maximize tax advantages, and scale their multifamily portfolios more efficiently. (big quote marks)

Key Takeaways for Multifamily Investors

In multifamily syndications, depreciation recapture presents unique considerations for investors. Syndicators often structure deals to maximize tax efficiency by strategically allocating depreciation benefits across investors, helping to reduce taxable income during ownership. However, when the property is sold, investors may face depreciation recapture taxes on their share of the gains. Investors should consult a tax professional who understands syndication-specific strategies to navigate these complexities and minimize tax liabilities. This proactive approach ensures investors fully leverage tax advantages while protecting their returns.

Book a call to see how you can utilize these investment strategies this tax season.

FAQs About Depreciation Recapture

How Is Depreciation Recapture Taxed?

Depreciation recapture is taxed as ordinary income, typically at a rate of up to 25%, separate from capital gains tax.

Can Depreciation Recapture Be Avoided?

While it can’t always be avoided, strategies like 1031 exchanges, cost segregation, and careful planning can minimize its impact.

Does Depreciation Recapture Apply to Multi-Family Syndication?

Yes, it applies when properties are sold, and investors should account for it when calculating potential returns.

What Is a 1031 Exchange?

A tax-deferral strategy allows investors to reinvest sale proceeds into like-kind properties, delaying depreciation recapture and capital gains taxes.

The post What Is Depreciation Recapture in a Real Estate Investment? appeared first on Viking Capital.

What Is a Reverse Market Crash?

A reverse market crash is a phenomenon that turns conventional market expectations on their head. They don’t look like traditional market crashes, in which values and prices all take a steep and sudden decline. The first sign of a reverse market crash is success — so much that market conditions rise to unsustainable levels. This can create a bubble that eventually bursts, leading to significant financial consequences. You can probably think of a few infamous reverse market crashes — does the dot com bubble ring a bell?

As a modern investor, you want to know that you’re putting your money toward something reliable and sustainable. That’s why we’re here to demystify reverse market crashes and teach you to recognize the warning signs, big and small. 

Key Characteristics of a Reverse Market Crash

It’s sometimes hard to spot a reverse market crash because it doesn’t follow the same playbook as traditional market crashes. Differentiating between a hot-but-sustainable market and one prone to implosion is a learned skill. Here’s how to tell the difference: 

• Excessive asset demand: Speculative buying, often fueled by investor exuberance or fear of missing out (FOMO), drives asset prices to unsustainable levels. Many people invest in a market all at once, causing a rise that cannot be maintained. 
• Liquidity imbalances: As prices peak, liquidity tightens. Buyers retreat, leaving sellers unable to exit positions without taking losses. This can trigger sharp price corrections.
• Sector-specific overvaluation: Certain industries or asset classes — often perceived as “hot” — experience surging valuations detached from their fundamental value. For example, the Zoom share price rose by 450% in 2020, a surge that will never be recreated. 

If a market seems too good to be true, it just might be. 

Conditions That Create a Reverse Market Crash

Reverse market crashes don’t occur in a vacuum — they arise from economic and market-specific conditions that push valuations to unrealistic levels. Here’s a closer look at the ingredients that create this financial recipe. 

Market Liquidity Shifts

Liquidity — how easily money flows through the market — can make or break speculative bubbles. When liquidity is high, cheap loans and accessible capital encourage rapid buying, inflating asset prices and making the market look trendy and valuable. When liquidity dries up, often due to rising interest rates or stricter lending policies, buyers pull back, and markets can unravel.

Recent examples include the Federal Reserve’s series of interest rate hikes starting in 2022, significantly reducing liquidity across various markets. Higher borrowing costs discouraged speculative investments in sectors like technology and cryptocurrency, where valuations had soared during periods of easy credit.

Similarly, the real estate market experienced a slowdown as rising mortgage rates pushed potential buyers out of the market. This exposed inflated asset prices, leaving over-leveraged investors and firms with properties or securities they could not offload without incurring steep losses.

Asset Demand Changes

Demand fluctuations can disrupt markets, especially when investors or consumers focus heavily on particular sectors. For instance, tech stocks soared during the pandemic as remote work and digital services expanded. But when the demand for those services leveled, so did their valuations.

The housing market in Austin, Texas, has experienced significant price corrections following a period of rapid appreciation. During the pandemic, Austin’s real estate market boomed, with median home prices peaking at $539,900 in May 2022. However, as mortgage rates increased and demand waned, the market shifted. Between July 2022 and April 2023, home prices in Austin fell by 10.2%, marking the steepest decline among major U.S. cities.

Private Equity Activity

Private equity firms can make or break market dynamics, particularly in sectors like real estate and technology. In the real estate arena, firms like Blackstone have actively acquired properties, notably investing over £1 billion in UK warehouses in 2024. This aggressive acquisition strategy has driven up valuations in the logistics sector. However, as interest rates rise and market conditions shift, these firms may seek to liquidate assets to realize profits, potentially leading to price corrections in overheated markets.

Private equity firms are a heavyweight in the tech sector, too. Firms have increasingly targeted tech companies, with private equity leading 57% of public-to-private technology deals in the first half of 2023, nearly doubling their share from previous years. This surge in investment can inflate valuations, especially in high-demand areas like software and SaaS. When these firms decide to exit their investments, often through sales or public offerings, it can signal a market peak. Subsequent withdrawals may contribute to market corrections, as seen in recent years with the recalibration of tech valuations.

The cyclical nature of private equity investments underscores their influence on market trends. Their strategic decisions to enter or exit positions contribute to both the escalation and contraction of asset prices across various sectors.

Impact of a Reverse Market Crash on Investments

A reverse market crash affects different types of investments, depending on the asset class and market conditions. Let’s explore how private equity, multifamily syndication, and broader investment portfolios can be impacted. 

Private Equity Investments

Private equity portfolios often face heightened risks during a reverse market crash, especially when market conditions are inflated. Over-leveraged positions — where firms rely heavily on borrowed capital — can become unsustainable if valuations drop or liquidity dries up. Exiting a market that is about to crash can be challenging, as buyers are less willing to pay peak prices during market uncertainty.

The 2022 downturn in the technology sector significantly impacted private equity-backed startups, leading to plummeting valuations and delayed exit strategies. For instance, the top decile of late-stage startups by valuation experienced a 54% decrease, with valuations dropping from $1.48 billion in Q3 2021 to $680 million in Q3 2022.

This decline forced many private equity firms to postpone initial public offerings (IPOs) and other exit plans, compelling them to hold onto assets longer than anticipated. Preliminary data shows that the fourth quarter of 2022 recorded just five private equity exits via IPO globally, the fewest in any quarter since at least the start of 2018.

Multifamily Syndication

The multifamily real estate market is one of the most stable investment opportunities, even during economic uncertainty or potential reverse market crashes. Multifamily properties benefit from consistent demand for rental housing, especially when homeownership becomes less affordable. This steady demand creates a buffer against market volatility, making multifamily syndication perfect for investors seeking stability.

While higher valuations may attract new investors, multifamily properties are less prone to the speculative bubbles that characterize reverse crashes. This stability comes from the essential nature of housing; people always need a place to live, regardless of economic conditions. Even during market downturns, multifamily properties often maintain strong occupancy rates and reliable cash flow. For investors looking for a dependable, income-generating asset, multifamily syndication could be the answer.

Broader Investment Portfolios

Traditional investments like stocks, bonds, and alternative assets can all be affected by a reverse market crash. Stocks with inflated prices may drop quickly, bonds can lose value as interest rates rise, and assets like commodities or cryptocurrency may become more volatile.

To reduce risk, investors should diversify their portfolios and consider defensive moves, such as investing in value stocks, keeping more cash on hand, and avoiding overly concentrated positions. Staying flexible and ready to take advantage of discounted assets during a downturn can also help protect and grow wealth.

How to Capitalize Off of a Reverse Market Crash with Private Equity and Multifamily Syndication

Reverse market crashes often trouble industries that depend on speculative valuations, but multifamily syndication is a resilient investment option. While other markets may experience dramatic volatility, multifamily real estate provides stability through consistent housing demand. Here’s how to make multifamily syndication a wise choice during reverse market crashes.

Strategic Investments

Investing in multifamily properties during a reverse market crash allows investors to capitalize on a sector that historically resists economic downturns. Unlike industries prone to speculative bubbles, the multifamily market is driven by the essential need for housing. During periods of economic uncertainty, rental properties tend to see sustained or even increased demand as homeownership becomes less accessible due to rising interest rates or tighter lending practices.

Strategically selecting multifamily properties in high-demand areas with strong rental markets can provide steady cash flow and long-term appreciation. Syndication opportunities offer additional benefits by pooling resources with other investors, enabling access to high-quality assets that may be out of reach individually. Multifamily investments are less likely to experience the extreme volatility seen in other sectors during reverse crashes, making them an excellent hedge against market instability.

Exit Strategies

While multifamily syndication offers stability, having a well-defined exit strategy protects you in the worst-case scenario. Reverse market crashes can create opportunities to sell properties at favorable valuations in strong rental markets or hold assets for continued cash flow if conditions aren’t ideal for a sale.

Because multifamily syndication is a long-term strategy, investors can weather market turbulence and benefit from eventual market recovery. Flexible exit strategies, such as refinancing to extract equity while retaining ownership, can help investors maximize returns without fully divesting during a downturn.

Long-Term Risk Mitigation

Multifamily syndication is inherently less exposed to the speculative risks that drive reverse market crashes. Investors can shield their portfolios from the dramatic decline in more volatile industries by focusing on tangible assets with stable demand. Even during economic uncertainty, multifamily properties often maintain high occupancy rates and consistent rental income, providing reliable returns.

Investors should evaluate market conditions and the risk profile of potential investments, prioritizing properties in regions with strong job growth, population increases, and limited housing supply. Diversifying across different geographic areas and property classes within multifamily can reduce risk even further. 

Reverse market crashes can be complex and unpredictable, but they also offer opportunities for those who are prepared. By focusing on strategic investments, crafting robust exit strategies, and mitigating risk, you can navigate reverse market crashes with confidence and success.

If you’re ready to explore multifamily syndication opportunities and make bright, sustainable investments, Viking Capital LLC is here to help. Contact us today to learn more about how our expertise can guide you in building a resilient portfolio that thrives, even during uncertain times.

FAQs About Reverse Market Crashes

What Is the Difference Between a Reverse and a Traditional Market Crash?

A reverse market crash occurs when asset prices spike unexpectedly, often driven by increased demand, liquidity shifts, or speculative investment. In contrast, a traditional market crash is characterized by a sudden decline in asset prices due to fear, uncertainty, or systemic failures.

How Can Investors Identify a Reverse Market Crash?

Investors can identify a reverse market crash by monitoring unusual asset price surges, increased market speculation, and reduced liquidity. Economic indicators, such as declining interest rates or aggressive private equity activity, may also signal the conditions for a reverse crash.

What Sectors Are Most Affected by a Reverse Market Crash?

Sectors such as real estate, particularly multi-family syndication, and private equity are often most affected. These sectors experience significant valuation changes, which can present profit opportunities but also heightened risks of overvaluation.

Can a Reverse Market Crash Lead to a Traditional Market Crash?

A reverse market crash can precede a traditional market crash if overinflated prices lead to widespread corrections. The transition occurs when investors recognize unsustainable valuations and begin selling off assets, triggering a domino effect.

Is a Reverse Market Crash a Sign of a Healthy Economy?

Not necessarily. While increased asset demand and liquidity may indicate economic optimism, a reverse market crash often reflects speculative behavior, which can destabilize markets and lead to corrections.

What Strategies Can Investors Use to Mitigate Risks During a Reverse Market Crash?

Investors can mitigate risks by diversifying portfolios, maintaining liquidity, and investing in assets with intrinsic value. Staying informed about market trends and consulting financial professionals are also crucial steps for risk management.

How Does a Reverse Market Crash Impact Real Estate Syndications?

In real estate syndications, a reverse market crash can drive property values higher, creating opportunities for existing investors to capitalize. However, it can also increase acquisition costs for new investments, requiring careful analysis of long-term profitability.

The post What Is a Reverse Market Crash? appeared first on Viking Capital.

What Is ESG in Real Estate?

ESG in real estate refers to applying Environmental, Social, and Governance principles to property development, management, and investment. These principles are designed to address pressing global challenges while ensuring ethical and sustainable growth in the sector.

Core Components of ESG in Real Estate:

• Environmental Sustainability: Real estate projects focus on reducing their carbon footprint through energy-efficient buildings, renewable energy integration, and waste reduction initiatives. Examples include properties certified with green building standards like LEED or ENERGY STAR.
• Social Responsibility: Developers and investors prioritize affordable housing, equitable resource access, and community engagement. These efforts create inclusive neighborhoods and improve overall quality of life.
• Ethical Governance: Transparency, accountability, and fairness guide decision-making processes in ESG-driven investments, ensuring stakeholders’ interests are upheld.

Applying ESG principles in real estate has a tangible impact, from developing energy-efficient residential complexes to promoting ethical business practices that foster trust among investors and tenants. Viking Capital exemplifies this approach, seamlessly embedding ESG principles into every property to create value-driven and socially conscious investments.

Why ESG Is Driving Change in Private Equity Real Estate

The rise of ESG-focused private equity investments stems from the growing demand for ethical and sustainable investment opportunities. Investors increasingly recognize the importance of aligning their portfolios with socially responsible practices, driving a shift in the real estate sector.

Key Drivers of ESG Adoption in Real Estate:

1. Growing Investor Demand: Today’s investors are prioritizing opportunities that offer financial returns alongside positive social and environmental outcomes. ESG-aligned investments appeal to this ethical mindset.
2. Enhanced Benefits for Private Equity Firms: Firms adopting ESG principles gain stronger reputations, ensuring they attract a broader range of investors. Regulatory compliance becomes more seamless, and ESG initiatives enhance financial resilience by improving tenant retention and operational efficiency.
3. Societal and Regulatory Push: Governments and societies alike are advocating for sustainable development and social equity, creating a supportive environment for ESG-driven real estate practices.

Private equity firms like Viking Capital are at the forefront of this movement, leveraging ESG principles to create value while addressing global challenges.

Multi-Family Syndication as an ESG-Aligned Investment Vehicle

Multifamily syndication serves as a powerful platform for implementing ESG-focused initiatives. By pooling resources from multiple investors, this model enables large-scale residential projects that prioritize environmental sustainability and social equity.

Examples of ESG-Focused Initiatives in Multifamily Syndication:

• Affordable Housing Projects: These initiatives address housing shortages, providing equitable access to quality homes for diverse populations.
• Green Building Certifications and Energy-Efficient Upgrades: Energy-efficient lighting, solar panels, and smart home technology reduce environmental impact and lower operational costs.
• Investments in Community Infrastructure: Building amenities like parks, fitness centers, and community spaces enhances the well-being of residents and fosters a sense of belonging.

Viking Capital integrates these ESG principles through its multifamily syndication projects, ensuring sustainable and impactful development.

ESG is likely to be quite different going forward from what it has been in the past, with investors focusing on… one or two main drivers of risk.

Author Name

Amit Seru

The Benefits of ESG-Aligned Private Equity Investments

Climate change and carbon emissions have emerged as the top ESG considerations for investors, closely followed by governance issues such as board structure, ownership frameworks, and board diversity. Interestingly, these factors are perceived to have different timelines for their impact. Over 75% of investors believe governance issues are most likely to influence investment performance within the next two years. Meanwhile, over 90% anticipate climate-related factors will significantly affect performance within a span of two to five years. This divergence underscores the multi-dimensional nature of ESG concerns and their varying implications on investment strategies.

For Investors:

• Ethical Portfolio Diversification: ESG investments allow investors to align their financial goals with their values, creating a balanced and conscientious portfolio.
• Sustainable Financial Returns: Properties designed with sustainability in mind often experience lower vacancy rates and stronger tenant retention, ensuring long-term profitability.

For Communities:

• Improved Housing Access: ESG-aligned investments focus on providing affordable, high-quality housing options, directly addressing societal needs.
• Reduced Environmental Impact: Green building initiatives and energy-efficient designs contribute to healthier, more sustainable neighborhoods.

By prioritizing ESG principles, private equity firms create opportunities that benefit both investors and the communities they serve.

Challenges and Risks in ESG-Driven Real Estate Investing

While ESG-aligned investments are promising, they come with challenges that require strategic management:

• Balancing Profitability and ESG Commitments: Achieving financial performance while adhering to sustainability goals can be complex.
• Higher Upfront Costs: Green certifications and sustainable materials often require significant initial investment.
• Navigating Regulatory Hurdles: Securing zoning approvals and community support may present obstacles that demand expertise and persistence.

Viking Capital addresses these challenges through careful planning and collaboration, ensuring projects remain both impactful and profitable.

The Future of ESG in Private Equity Real Estate

The integration of ESG principles in real estate is poised to grow, driven by technological advancements and evolving investor expectations.

Predictions for ESG Growth:

• Technological Innovations: Smart housing, renewable energy solutions, and resource-efficient construction will play a pivotal role in advancing ESG goals.
• Leadership Opportunities: Private equity firms have a unique chance to set industry benchmarks, driving innovation and sustainability in real estate.

As a leader in ESG-focused investments, Viking Capital is committed to shaping a sustainable future through responsible real estate practices.

How To Evaluate ESG-Driven Real Estate Investments

Investors seeking to participate in ESG-aligned opportunities should conduct thorough due diligence to ensure alignment with their values and financial goals.

Key Evaluation Criteria:

• ESG Metrics and Certifications: Look for properties with certifications like LEED or ENERGY STAR demonstrating a sustainability commitment.
• Firm Policies and Track Records: Investigate the private equity firm’s history of ethical and sustainable investments.
• Key Questions to Ask: How does the project enhance environmental sustainability? What social benefits does it provide? Are governance practices transparent and ethical?

By assessing these factors, investors can identify projects that uphold ESG principles while delivering competitive financial returns.

Viking Capital is redefining private equity real estate through its unwavering commitment to ESG initiatives. Discover how our investments create lasting, positive impacts for communities and investors alike by exploring our ESG-driven opportunities.

The post The Rise of Positive Private Equity Investments in Real Estate appeared first on Viking Capital.

As deadlines draw near, making proactive investment adjustments can enhance your tax situation while positioning you for long-term growth. Whether you are exploring opportunities to rebalance your portfolio, taking advantage of tax benefits, or gearing up for next year’s market conditions, these actions are crucial for multifamily investors aiming to finish the year successfully. This article outlines these advantageous tax strategies.

Capital Gains and Your Tax Strategy

Every multifamily investor needs to understand capital gains because they directly impact your bottom line when selling an asset. A capital gain is subject to taxes, and how much is owed depends on factors like how long the property has been held and the investor’s tax bracket. Knowing the rules around capital gains helps you plan smarter, take advantage of tax-saving strategies, and ultimately keep more of your hard-earned returns. 

Capital gains are the profit you earn when you sell a capital asset—anything you own for personal or investment purposes, like properties or investment assets like stocks or bonds. The capital gain is calculated as the difference between the asset’s adjusted basis (usually what you paid for it) and the amount you receive from the sale. For example, if you sell an investment property for more than you initially invested, that profit is your capital gain. However, not all sales result in gains. If the asset sells for less than its adjusted basis, you incur a capital loss, though losses on personal-use assets like a home or car typically can’t be deducted from your taxes. Understanding these concepts is key to managing tax liability and maximizing investment returns.

Why Timing Matters for Tax Planning

Year-end tax planning is crucial to set yourself up for success as you prepare for upcoming tax law changes, define new financial goals, and align your portfolio with current market conditions and personal objectives. Taking proactive steps now allows you to maximize deductions, minimize tax liabilities, and ensure your investments are positioned to deliver optimal returns. Whether leveraging capital losses, adjusting your asset allocation, or meeting specific income targets, strategic planning at the end of the year ensures your portfolio meets your financial goals and positions you to capitalize on new opportunities in the coming year.

The Concept of Portfolio Rebalancing for Multifamily Investments

In a recent Wealth Unfiltered episode Building a Better Portfolio, our VP of Investor Relations, Chris Parrinello, highlighted the crucial role of portfolio rebalancing in mitigating risk for multifamily investors. Portfolio rebalancing involves adjusting your asset allocation to maintain your desired balance of risk and reward. This strategy offers significant advantages for multifamily investments: it ensures optimal asset allocation, boosts cash flow potential, and enhances tax efficiency. By proactively rebalancing your portfolio, you can safeguard your investments, maximize returns, and stay on track to achieve your long-term financial goals—even in a shifting market landscape.

Key Tax Strategies for Year-End Portfolio Rebalancing

To effectively rebalance your portfolio, focus on key strategies that optimize performance and reduce risk. First, review your current asset allocation to ensure it aligns with your financial goals and risk tolerance. Then, sell underperforming assets to implement tax-loss harvesting, which can offset capital gains. Next, invest in high-performing multifamily opportunities to increase cash flow potential and strengthen your portfolio’s resilience. Lastly, diversify your holdings across different markets and asset types to reduce exposure to market fluctuations. By actively rebalancing your portfolio with these strategies, you can enhance returns, improve tax efficiency, and build a more robust, resilient investment foundation.

Pro Rebalancing Tip:

When rebalancing an investment portfolio savvy investors know that market downturns can present tax-saving opportunities. Instead of panicking over declining asset values, they strategically liquidate underperforming investments to generate capital losses. These losses can offset capital gains, reducing the overall tax burden on profits. In some cases, investors can use excess losses to offset up to $3,000 of ordinary income annually, carrying forward any remaining losses to future tax years. By understanding and applying these strategies, experienced investors turn setbacks into opportunities, leveraging the tax code to optimize their portfolios and preserve wealth.

Enhance Your Portfolio with Two Powerful Tax Strategies

To enhance your multifamily portfolio, focus on two powerful strategies: 

1) Deferring Capital Gains through 1031 Exchanges and Maximizing Depreciation Deductions. With a 1031 exchange, you can defer taxes by leveraging like-kind exchanges, upgrading your assets while keeping more capital in play. Ensure compliance with IRS rules to fully benefit from this strategy. 

2) Cost segregation can accelerate depreciation on newly acquired assets and claim bonus depreciation on eligible properties. This will boost tax efficiency and enhance overall returns. These strategies can significantly strengthen your portfolio’s financial performance and long-term value.

Effective Techniques for Rebalancing Multifamily Portfolios

To optimize your portfolio, start by assessing your portfolio performance—analyze cash flow, ROI, and market trends to pinpoint properties that no longer align with your investment goals. Next, reinvest in high-growth markets, targeting areas like the Sunbelt where demand is increasing, vacancy rates are low, and rent growth is strong. Use cash-out refinancing to leverage equity from existing properties to fund new acquisitions, and boost your capital allocation for higher returns. These strategic rebalancing techniques ensure your portfolio remains dynamic, profitable, and well-positioned for sustained growth.

Tax Implications to Watch Out For

Understanding investment tax implications is crucial to preserving capital and minimizing tax liability. Three key tax penalties to be aware of are: the wash sale rule, passive activity loss limits, and short-term capital gains tax.

1. The wash sale rule occurs when you sell a stock or asset at a loss and then buy the same or a substantially identical asset within 30 days; this prevents you from claiming the loss on your taxes.
2. Passive activity loss limits restrict your ability to deduct losses unless you meet the criteria for real estate professional status.
3. Additionally, short-term capital gains (assets held for less than a year) are taxed at higher ordinary income rates, while long-term capital gains (assets held for over a year) benefit from lower tax rates. For example, selling a property after five years qualifies as a long-term capital gain, whereas selling it after six months would be short-term. Awareness of these penalties and tax nuances helps investors strategically manage their portfolios, optimize returns, and ensure compliance with tax regulations.

Conclusion

Working with a knowledgeable, real estate-focused CPA is a game-changer for multifamily investors. A specialized CPA understands the complex tax landscape and can help optimize your portfolio with strategies like 1031 exchanges, cost segregation, and bonus depreciation, ensuring you maximize your returns while staying compliant. At Viking Capital, we’re committed to supporting our investors every step of the way. We’re always here to offer recommendations and collaborate on investment strategies, providing insights and resources that drive success. Leverage our experience and network to maximize your multifamily investments and keep your financial strategy strong and efficient.

Book a call now to discuss our available 1031 investment opportunity: Peoria Gateway and mitigate your tax liability now: 

The post Year-End Tax Strategies for Multifamily Investors appeared first on Viking Capital.

What Defines a Growth Area

A growth area is defined by a combination of strong economic indicators, population expansion, and robust infrastructure development. Job growth and rising median income levels point to a thriving economy, while economic diversity ensures resilience against market fluctuations. Areas with increasing population growth show clear demand for multifamily housing, as more residents seek quality rental options. New infrastructure, such as public transportation and community amenities, signals future development and enhances the appeal of these locations., A recent study by Moody Analytics highlights how labor market conditions, socio-economic benefits, environmental concerns, and ongoing work-from-home policies shape migration patterns, directly influencing housing demand. Markets, where rental demand outpaces homeownership, reflect shifting preferences, making these high-growth areas prime opportunities for multifamily investment.

Analyzing Market Data and Trends

Successful multifamily investing requires actively analyzing market data and trends to identify promising opportunities. Investors can leverage reliable real estate market reports to track key metrics like rental growth, vacancy rates, and cap rates, offering a clear picture of market performance. Evaluating historical property appreciation helps predict future growth potential, guiding strategic decisions. Additionally, spotting transitioning neighborhoods with signs of gentrification or revitalization projects provides early entry into markets poised for long-term appreciation. This is one of Viking’s key strategies used on all future deals and potential locations. Staying informed through data and observing neighborhood dynamics ensures investors position themselves in markets with strong growth trajectories.

Local Economic Drivers and Job Creation

Local economic drivers and job creation play a pivotal role in shaping the success of multifamily investments. Major employers moving into or expanding in a city significantly boost housing demand, as seen in Austin’s rise as the tech hub of the South. Growing industries like tech, healthcare, and education provide long-term stability by attracting skilled professionals and fostering economic growth. Government initiatives, such as tax breaks and development plans, further enhance regional appeal, creating fertile ground for multifamily investments. For example, Fortune 500 companies relocating to the Dallas area are driving a surge in multifamily demand, making it a hotbed for investment opportunities. Identifying these drivers allows investors to tap into thriving markets with strong economic fundamentals.

Evaluating Infrastructure and Community Development

Evaluating infrastructure and community development reveals critical insights into multifamily investment opportunities. Expanding transportation networks, such as new public transit systems and highway projects, significantly boost housing demand by improving accessibility. Retail and commercial growth, including shopping centers, restaurants, and businesses, signal upward trends in neighborhood desirability. Quality-of-life factors, such as top-rated schools, parks, and safe environments, are strong indicators of long-term appeal for renters. For example, our latest investment opportunity, Avondale Hills, is situated in a thriving Atlanta suburb. With a new MARTA station less than a block away, the area exemplifies the city’s growth trajectory, highlighting the potential for strong multifamily returns in emerging markets.

Spotting Early Signs of Neighborhood Gentrification

Spotting early signs of neighborhood gentrification allows investors to get ahead of market trends. Increased construction and renovation projects, such as the appearance of new apartment complexes or refurbished properties, often signal future growth. Cultural and lifestyle shifts, like the emergence of trendy cafes, boutique stores, and shifting demographics, reflect changing community dynamics that attract renters. Rising rental rates, when compared to historical data, are a strong indicator of growing demand in an area. For example, neighborhoods like East Nashville and Bushwick in New York have experienced dramatic transformations, with rental rates climbing as new developments and businesses revitalized these areas. Identifying these trends early can position investors for high returns in transitioning markets.

Technology and Tools to Predict Growth Areas

To stay ahead in multifamily investing, leverage technology and tools that predict growth areas. Real estate investment platforms and apps like Zillow, Redfin, and CoStar provide essential market data on rental trends, property values, and occupancy rates. Additionally, predictive analytics tools use advanced algorithms to forecast potential growth areas based on historical trends, helping investors make smarter decisions. Top investors rely on multiple data sources and comprehensive market reports to validate insights and ensure accuracy. By combining these tools and platforms, you can identify the best investment opportunities with confidence and capitalize on emerging markets before others even see the potential.

Conclusion

Identifying high-growth markets requires a strategic approach, and successful investors focus on key factors like economic indicators, population trends, infrastructure development, and neighborhood dynamics. By analyzing market data, leveraging predictive tools, and staying informed about local economic drivers, investors can pinpoint areas with strong potential for rental demand, property appreciation, and long-term stability. At Viking Capital, we combine these strategies with rigorous research and due diligence to consistently identify the most promising investment opportunities. Our commitment to uncovering high-growth markets enables us to deliver strong, risk-adjusted returns and create lasting value for our investors. By staying ahead of trends and prioritizing data-driven decision-making, Viking continues to bring unparalleled opportunities that drive success for our investor community.

Ready to explore new investment opportunities for multifamily?

Accredited Investors- Check out Viking Capital’s open investment opportunities now: Book a call with our Investor Relations Team to learn about our diverse investment options: 

The post How to Identify High-Growth Markets for Maximum Multifamily ROI appeared first on Viking Capital.

In 2004, Dave Winer collaborated with former MTV VJ Adam Curry to launch iPodder, which allowed users to download audio content directly to their iPods. The term “podcast” is derived from the iPod. By the end of that year, Libsyn became the first podcast-hosting platform, providing a dedicated space for podcasters.

Today, podcasts are used as an educational resource, entertainment, and a place for professional podcasters to make real money. Investors rely on podcasts as indispensable resources, offering insights, strategies, and expert perspectives in a convenient and digestible format. With their increasing popularity, podcasts have established themselves as essential tools for navigating the ever-changing landscape of investment and finance. This article outlines the top benefits of financial podcasts.

The Benefits of Listening to Podcasts

Podcasts are surging in popularity because they are incredibly accessible. Every day, hundreds of new podcasts hit the airwaves, allowing listeners to choose hosts they connect with, the content they want, and when and where they tune in. Whether commuting to work, tackling a morning workout, preparing dinner, or unwinding before bed, podcasts offer a flexible and convenient way to consume information and entertainment, making them one of today’s top media platforms. Here are the incredible benefits of listening to financial podcasts:

Expert Insights at Your Fingertips

Financial podcasts give investors direct access to leading industry experts and thought leaders. By tuning in, listeners gain valuable insights from successful investors, market analysts, and financial advisors who share their strategies and expertise. These podcasts dive deep into market trends, effective investment approaches, and significant economic shifts, providing listeners with actionable knowledge to stay ahead.

Stay Updated on Market Trends

Another benefit to listening to financial or investment podcasts keeps investors ahead of the curve by delivering timely updates on global and local markets. These podcasts offer real-time analysis of major economic events, breaking down their immediate and long-term impacts on investments.

For multifamily investors, staying updated through financial and investment podcasts is a strategic advantage in navigating today’s dynamic market. These podcasts provide timely updates on trends like interest rate changes, housing demand shifts, and regional market growth—factors that directly impact multifamily asset performance. Real-time analysis of economic events, such as inflation data or Federal Reserve policies, equips investors to anticipate and adapt to shifts in financing conditions or renter demand.

Additionally, understanding how current trends influence asset classes helps multifamily investors refine their strategies, such as identifying emerging submarkets or timing acquisitions to optimize returns. By staying informed, investors can better evaluate risk, seize opportunities, and leverage market insights to enhance portfolio diversification and long-term success.

Personalized Investment Strategies

Podcasts deliver tailored content designed to align with your specific investment goals, whether focused on real estate, stocks, cryptocurrencies, or a combination of asset classes. By exploring various expert perspectives, podcasts help you diversify your approach and think strategically. They offer practical advice for both new and seasoned investors, breaking down complex topics into actionable insights. These benefits keep you actively engaged in monitoring your portfolio, equipping you with fresh techniques and strategies to refine your wealth-building journey. With a podcast in your ear, you’re constantly learning, adapting, and staying ahead in the ever-evolving investment landscape.

Engaging and Digestible Content

Another incredible benefit is podcasts excel at breaking down complex financial topics into easy-to-understand segments, making even the most daunting concepts approachable. Through an engaging, conversational tone, hosts simplify jargon and clarify ideas, transforming what might seem overwhelming into something relatable. They often use real-world examples and case studies to illustrate key points, connecting abstract theories to practical applications. This method enhances learning and keeps listeners captivated, turning what could feel like a lecture into an enjoyable and valuable experience. By delivering insights in a digestible format, podcasts make it easier for investors to grasp complex topics and apply them confidently to their own strategies.

Building a Community

Podcasts create a vibrant community where listeners connect, share, and grow together. By fostering access to networks and groups, they provide a platform for investors to exchange experiences, strategies, and tips, building relationships with like-minded individuals striving toward similar financial goals. Many podcasts go beyond audio, offering participation in live events, webinars, and interactive Q&A sessions that deepen engagement and provide real-time value. This sense of belonging and collaboration empowers listeners, encouraging them to learn from each other, stay motivated, and expand their personal and professional networks as they pursue their wealth-building journeys.

Conclusion

Podcasts are a powerful tool for every investor, from beginners taking their first steps to seasoned professionals refining their strategies. They provide timely market updates, break down complex topics into digestible insights, and offer tailored advice to suit specific financial goals. By fostering a sense of community and sharing real-world examples, podcasts educate and inspire, keeping you engaged in your journey toward wealth generation. Whether you’re seeking new strategies, monitoring your portfolio, or expanding your knowledge, podcasts are a resource you can rely on. Start exploring different financial podcasts today and make them a regular part of your learning routine. Your financial growth and future success will thank you!

Ready to start listening?

Viking Capital just launched its brand new podcast, Wealth Unfiltered, which is focused on helping investors maximize their wealth potential. Each episode dives deep, offering high-level market insights, exclusive expert interviews, and actionable wealth-building strategies to empower your investment decisions.

Available on all major platforms including Spotify and Apple podcasts.

The post Top Benefits of Financial Podcasts appeared first on Viking Capital.

As we consider the year ahead we would love to hear from you! We strive to create content you want to hear, and bring you acquisitions you want to invest in. Help us do the best for you this coming year with a brief survey.

A retired boxing legend is making waves in real estate with a $402 million contract to purchase a 1,000-unit affordable housing portfolio in Upper Manhattan. This acquisition, one of New York City’s largest multifamily deals of the year, underscores the growing appeal of multifamily investments for portfolio diversification.

While celebrities tend to gravitate toward flashy ventures, this move highlights the long-term value of stable, income-generating real estate assets.

Viking Capital has released a Q2 Multifamily report, further highlighting the stability of multifamily in various regions throughout the U.S.

Inside you will discover:

• Regional Analysis
• Key Market Trends for Q3
• Economic Conditions and Forecast

One of Viking Capital’s core values is a help first mindset, and one of the ways that we accomplish that is through charitable giving.

All year long, Viking Capital puts money aside with the sole purpose of charitable donations.

We have three charities that we donated to this year–EcoDrive, One Tree Planted, and Magic Bus.

As always, if you have any questions, do not hesitate to reach out to our Investor Relations Team.

Onward & Upward,

Twenty days after the presidential election, the CRE market is starting to see the ripple effects of a Republican trifecta.

According to John Chang of Marcus & Millichap, key policy shifts—including potential tax law extensions, trade tariffs, and immigration reforms—are already influencing interest rates and shaping investor sentiment.

While uncertainty remains around how and when these policies will roll out, long-term demand drivers like housing shortages and consumer financial stability continue to support the market’s foundation.

Key Takeaways:

1. Tax Policy in Focus: The extension of the 2017 Tax Cuts and Jobs Act, set to expire in 2025, could create significant changes for the CRE industry.
2. Inflation Concerns: Tariffs and immigration policy shifts may drive inflation, potentially pushing up CRE financing costs.
3. Interest Rate Recalibration: Expectations for Federal Reserve rate cuts have softened, with fewer reductions likely by mid-2025.

Want to dive deeper? Watch John Chang’s video for expert insights on what the post-election landscape could mean for CRE investors.

The Sun Belt continues to dominate multifamily growth, driving national apartment supply in 2025. Texas metros like Dallas, Austin, and Houston lead the charge, delivering 14–27K units each. Other booming Sun Belt markets, including Charlotte, Raleigh, Atlanta, and Orlando, are also benefiting from robust population and economic expansion.

While major metros excel in volume, smaller markets are achieving impressive growth rates. Asheville, NC, tops the nation with a 13.3% inventory increase, alongside rapid growth in Huntsville, AL, Wilmington, NC, Savannah, GA, and Myrtle Beach, SC, with inventory growth exceeding 7%.

Key Highlights:

• Sun Belt Leadership: The region remains a hotspot, fueled by job growth, affordability, and migration.
• Strong Supply Gains: Both large and small Sun Belt markets are delivering significant new units, reinforcing their appeal to renters and investors.
• 2025 Outlook: Supply pressures are expected to ease, with leasing conditions and rents stabilizing by spring, signaling a market recovery.

Operators and investors betting on Sun Belt growth are poised to capitalize on its strong fundamentals and resilient demand.

Tune into Viking Capital’s wealth {un}filtered. – Cutting Through the Noise to Deliver Real Investment Expertise!

• New Episodes Every Month: Dive into expert insights, latest market trends, and actionable wealth-building strategies.
• Engaging Interviews: Learn from top industry pros as they break down real-world financial applications.
• Stay Ahead: Get the knowledge to make smart financial moves and keep pace with today’s dynamic market.

Listen to our FIRST EPISODE Today!

Viking Capital is excited to announce the completion of major renovations at Elevate Huebner Grove, following similar upgrades at Greene and Kings Cove earlier this year.

These renovations are part of our ongoing efforts to enhance properties across our portfolio to force appreciation for our exits.

This December Viking Capital will be closing on both Avondale Hills and The Townhomes at BlueBonnet Trails. In the meantime, Peoria Gateway, our new construction in Peoria, Arizonais open for investment.

We’re looking forward to 2025 where we expect to have a new investment opportunity at the start of the New Year! Be on the lookout for New Deal Alerts.

The post Viking Capital Newsletter- November 2024 appeared first on Viking Capital.

Understanding the effects of inflation is crucial to navigating today’s market dynamics, especially for those looking to make informed decisions about their financial future. At the same time, the ranks of accredited investors—those who meet specific income or net worth thresholds—are expanding at an unprecedented pace. In this article, we’ll explain how inflation impacts wealth, what it truly means to be an accredited investor, and the fascinating rise of this growing group in today’s economy. 

Understanding Inflation’s Ripple Effect on Wealth

Inflation occurs when the general prices of goods and services rise over time, reducing the purchasing power of money. Simply put, as inflation increases, each dollar buys less than it did before. This phenomenon happens due to increased demand, rising production costs, or an expansion of the money supply. The U.S. economy saw inflation rise at unprecedented levels as a reaction to the influx of money supply pumped into the economy to offset the many jobs lost from the COVID-19 pandemic. 

While inflation diminishes the value of currency, it simultaneously increases the value of assets like real estate and stocks, making multifamily investments a valuable hedge against it. For multifamily investors, inflation often leads to higher rents and property values, enhancing returns. However, it also drives the need for higher income and assets to sustain purchasing power, indirectly fostering long-term wealth growth for those who strategically leverage these conditions. 

What It Means to Be an Accredited Investor

​​Unfortunately, not everyone can utilize multifamily investments to build long-term wealth. In most cases, investing in a multifamily syndication requires being an accredited investor. To qualify, individuals typically need an annual income of at least $200,000 (or $300,000 with a spouse) for the last two years, or a net worth exceeding $1 million, excluding their primary residence. Accredited investors gain access to exclusive opportunities, such as high-return multifamily syndications, often unavailable to the general public. These investments can accelerate wealth growth by offering passive income, tax benefits, and significant appreciation potential, creating a pathway to financial freedom for those who meet the criteria. The thresholds for accredited investor status have remained unchanged since the early 1980s. In 1983, only 1.5 million households, or 1.8%, met the qualifications, according to SEC data. 

Inflation’s Impact on Wealth Accumulation

Over the last few years, inflation has continued to rise, pushing asset prices higher, directly benefiting individuals who already own investments like stocks and multifamily real estate. In the 2024 U.S. multifamily market, property values have surged, with many areas experiencing double-digit growth in valuation over recent years. Similarly, the stock market has shown strong performance, with key indicators reflecting significant gains. These rising asset values are enhancing existing portfolios and helping more individuals cross the accredited investor threshold by increasing their net worth. To illustrate this process, consider a multifamily property bought for $2 million in 2020, which could now be valued at $2.6 million due to inflation-driven appreciation. This example shows how holding assets during inflationary periods can accelerate wealth-building opportunities.

If the financial thresholds remain unadjusted for inflation, most Americans will join the ranks of accredited investors in the coming decades. The SEC predicts that by 2052, nearly 119 million households — about 66% of them — will qualify.

The Emergence of Millions of New Accredited Investors

The Securities and Exchange Commission reports that in 2022, over 24 million U.S. households, or about 18.5%, qualified as accredited investors. This marks an increase of approximately 8 million households since 2019 when 13% met the criteria. The SEC attributes this growth primarily to inflation. This surge has increased demand for private equity, real estate syndications, and other exclusive investment opportunities reserved for accredited investors. As more people qualify, the investment landscape is shifting, with a growing focus on high-yield private investments. This trend has the potential to reshape strategies, as a larger pool of investors seeks to diversify portfolios and capitalize on these lucrative opportunities.

Opportunities and Risks for New Accredited Investors

New accredited investors now have access to unique opportunities, including alternative investments like private equity, real estate syndications, and venture capital. While these opportunities offer the potential for higher returns, they also come with increased risks, particularly for those unfamiliar with higher-risk or less liquid assets. To navigate these opportunities wisely, new accredited investors should assess their risk tolerance, and use smart investment strategies such as diversifying their portfolios through funds that spread risk across various investments and strategic partnerships. Additionally, working with a financial advisor can provide valuable insights and help ensure informed decision-making, minimizing potential pitfalls.

Conclusion

This article has defined inflation and its impact on society’s ability to become an accredited investor, illustrating how this shift is reshaping the investment landscape. As more individuals qualify as accredited investors, they gain access to exclusive, high-return opportunities, particularly in multifamily investments. This surge in accredited investors is driving increased demand for private equity and real estate syndications, which in turn boosts the multifamily market. For the U.S. economy, this trend could fuel growth in key sectors, fostering capital inflows and contributing to the development of high-value assets. While these opportunities come with higher risks, navigating them strategically with diversified investments and professional advice can help investors capitalize on the evolving financial landscape, while also supporting economic growth and stability.

The post Inflation And The Emergence of Millions of Accredited Investors appeared first on Viking Capital.

Understanding Bonus Depreciation

Bonus depreciation allows investors to offset passive income on their taxes, reducing overall tax liability. Through cost segregation, real estate investors can analyze an asset’s purchase price or construction cost to determine how much can be depreciated over 5, 7, or 15 years instead of the standard 27-year schedule.

Benefits of Cost Segregation

• Enhanced Cash Flow: Defers tax liability so investors can reinvest savings immediately into new opportunities.
• Time Value of Money: Speeds up asset depreciation, enabling faster returns that can fuel growth, reinvestment, or debt reduction.
• Lower Tax Burden: Provides additional passive losses to offset income, lowering taxable income and boosting tax savings.

Election Outcomes and Policy Scenarios

As the election unfolds, the power distribution in Congress will shape potential outcomes depending on which party gains control. With Donald Trump in office, the balance of power between the House and Senate will play a crucial role in policy direction. The Trump campaign has made several promises, including:

• Make expiring TCJA individual income tax cuts permanent.
• Eliminate taxes on tipped wages, overtime, and Social Security payments.
• Vice presidential nominee JD Vance has suggested expanding the child tax credit to $5,000.
• Trump advisers have pushed to keep the cap on the SALT deduction.

What this Means for Multifamily Investors

Donald Trump’s platform includes restoring key business tax provisions from the Tax Cuts and Jobs Act (TCJA), notably reinstating 100% bonus depreciation as of January 2026. If enacted, this change would allow investors to fully write off the cost of eligible assets in the year of purchase, a powerful tool for those focused on maximizing cash flow, accelerating returns, and reducing taxable income.

For multifamily investors, 100% bonus depreciation would open significant opportunities. Enabling investors to deduct large portions of property value upfront enhances cash flow, providing the capital needed to reinvest, expand portfolios, or reduce debt more aggressively. This approach can dramatically improve after-tax returns and support the compounding growth essential for building passive income streams and long-term wealth.

Though details on other proposed tax policies remain unclear, this commitment to bonus depreciation benefits multifamily investors who use tax advantages strategically to amplify portfolio growth. For investors anticipating potential policy shifts, aligning their current tax and investment strategies with these possible changes could be critical to maximizing future gains.

Investor Implications and Strategies

The presidential transition will delay the implementation of new policies, and investor strategy must account for this timeline. As we near the end of 2024, bonus depreciation remains at 60%, with no guarantee of change. Investors should consider this might be the highest bonus depreciation available moving forward, making now an opportune time to offset passive income through this tax benefit.

All signs indicate that the phase-out schedule will continue, dropping bonus depreciation to 40% in 2025. If Trump’s proposed legislation doesn’t pass, bonus depreciation could phase out entirely by 2027—though bipartisan support suggests the bill may eventually be enacted. 

Preparing for Possible Outcomes

Tax planning and collaborating with a CPA have never been more important. Election years bring policy uncertainties that can dramatically alter tax strategies, positively and negatively affecting your financial outcomes. Strategic tax planning becomes essential to adapt to these shifts, especially for investors, business owners, and families who may be impacted by changing deductions, credits, and tax rates.

This year, both parties appear aligned on several taxpayer relief measures, including increases to the child tax credit, tax exemptions for tipped wages, and targeted assistance for the working class. These areas of agreement suggest that certain tax benefits may persist, providing some predictability in planning for families and middle-income earners.

However, the two parties also diverge on several key tax issues, particularly around corporate tax rates, capital gains, and deductions for business expenses. These points of contention reflect different economic philosophies but also create a system of checks and balances. Any proposed changes to tax policy will require a majority in Congress, ensuring that impactful shifts are carefully reviewed and debated. This process helps reduce the likelihood of extreme measures, as bipartisan support—or at least some compromise—will likely be necessary for the most significant changes to move forward.

As potential tax changes unfold, proactive planning with a qualified CPA becomes invaluable. By staying informed on proposed legislation and anticipating shifts in tax law, your CPA can help identify opportunities to protect wealth, maximize deductions, and create flexible strategies. This approach enables you to adapt quickly, taking advantage of today’s tax benefits while preparing for tomorrow’s changes. A robust, adaptable tax strategy is essential in an unpredictable tax environment to minimize risk and optimize your financial position.

Conclusion

With the new election outcome, investors should closely examine proposed tax policies and proactively adjust their investment strategies. If bonus depreciation returns to 100%, investors gain significant long-term benefits. However, with no guarantee, it’s essential to leverage the current 60% bonus depreciation to maximize returns and reduce tax liability. To explore Viking Capital’s current investment opportunities, book a call with our team and lock in the 60% depreciation benefit before the year ends!

Are you ready to take advantage of Bonus Depreciation opportunities? 

The post Bonus Depreciation: How the Election Results Shape Investor Strategies appeared first on Viking Capital.

It’s these collaborative, forward-thinking sessions that fuel our momentum, driving Viking Capital closer to our ambitious growth goals.

Speaking of growth, Viking Capital nearly doubled our team in 2024.

Our expanded team means we’re poised to achieve more than ever. With each new team member amplifying our expertise, we’re set to innovate faster, scale our deal flow, and deliver unparalleled value to our investors.

This growth marks a powerful step forward, positioning Viking Capital to set new industry standards and reach remarkable milestones together.

Viking Capital has launched a Fund of Fund program for all investors looking to pool capital and create enhanced economics for yourself and your group.

Investing through a Fund of Funds (FOF) model offers several benefits:

• Simplified Investment Process: The program offers a turnkey solution that handles everything from creating investment decks to managing legal documentation, bank accounts, and tax filings, making it easier and faster for investors to raise capital without the hassle of forming their own fund or navigating complex co-GP structures.
• Compliance and Scalability: Viking Capital’s program is fully SEC-compliant, ensuring you avoid broker-dealer law issues. Its scalable structure allows multiple fund-of-fund partners to participate in a single offering, enabling the acquisition of larger, high-quality properties.
• Cost Efficiency: The program is cost-effective, supported by a dedicated back-office team that manages all administrative tasks. By scaling across multiple partners, Viking Capital can offer these services at a lower cost, maximizing your investment potential.

Book a call to learn more about our Fund to Fund program.

As always, if you have any questions, do not hesitate to reach out to our Investor Relations Team.

Onward & Upward,

3 Key Indicators of a Market Shift You Need to Watch

Employment Rates: Rising or falling employment levels can signal a shift in the economy. Consumer Spending: Changes in how people are spending can hint at market trends and economic health. Inflation: Watch inflation closely—it can directly impact purchasing power and market dynamics.

Here’s a breakdown of how each candidate’s policies could shape the future of housing:

Kamala Harris on Housing

• Housing Supply Goals: Harris aims to build 3 million new homes and rental units by 2029. Her plan involves offering tax incentives and establishing a $40 billion fund to boost housing construction, though specifics on the mix of single-family versus multifamily are unclear.
• Zoning and Development: Proposes removing zoning restrictions and other barriers to multifamily housing, although implementing this federally is complex as zoning is typically local.
• Affordable Housing: Advocates for expanding the Low-Income Housing Tax Credit (LIHTC), which could increase affordable housing availability if passed.
• Rent Control and Algorithm Regulation: Supports certain rent control measures and wants to regulate algorithms that set rental prices, aiming to protect renters from excessive price hikes.
• Tax Policy Changes: Proposes to increase the corporate tax rate, tax carried interest as regular income, limit like-kind (1031) exchanges, and raise capital gains tax for high earners, potentially impacting investment returns in real estate.

Donald Trump on Housing

• Housing Production and Land Use: Trump supports using federal land for housing construction, reducing regulatory hurdles, and streamlining the permitting process to make housing development more efficient.
• Zoning Preferences: While open to increasing housing supply, Trump opposes efforts to end single-family zoning, viewing it as vital to preserving suburban neighborhoods.
• Rent Control Opposition: Strongly against rent control, seeing it as ineffective in increasing housing supply or improving affordability.
• Opportunity Zones for Housing: Indicates an interest in creating a new Opportunity Zone program focused on housing, potentially incentivizing development in underserved areas.
• Tax Policy Continuity: Trump aims to extend or deepen the 2017 Tax Cuts and Jobs Act benefits, including lower corporate tax rates and the pass-through income deduction, which favor real estate businesses.

The Federal Reserve’s November 6-7 meeting will likely adjust interest rates depending on election results, which could impact economic outlooks. A decisive win for a candidate favoring fiscal expansion might push for tighter rates, while a stable or pro-market outcome may support a pause.

Apartment Sales Volume is Up in Q2—Here’s Why That’s Great News for Investors!

Here’s why this trend matters:

• Market Demand & Stability: Higher transaction volumes often indicate a healthy market, as more buyers show confidence in the stability and resilience of multifamily properties. Increased demand creates a more liquid market, making it easier for investors to buy or exit when the time is right.
• Competitive Advantage: As sales rise, so do opportunities to lock in prime properties with appreciating value. Investors who get in during an upward trend often see accelerated returns, especially as demand fuels rent growth and occupancy rates.
• Positive Economic Signal: This uptick shows that multifamily remains a favored asset class for savvy investors, especially amidst economic shifts. With more institutional interest, investment in multifamily continues to offer risk-adjusted returns, ideal for portfolios focused on long-term gains.

Tune into Viking Capital’s wealth {un}filtered. – Cutting Through the Noise to Deliver Real Investment Expertise!

• New Episodes This Month: Dive into expert insights, latest market trends, and actionable wealth-building strategies.
• Engaging Interviews: Learn from top industry pros as they break down real-world financial applications.
• Stay Ahead: Get the knowledge to make smart financial moves and keep pace with today’s dynamic market.

Looking to sharpen your investment game or understand complex market shifts?

Submit your questions, listen in, and take charge of your wealth journey this November!

Viking Capital is excited to announce the completion of major renovations at Elevate Huebner Grove, following similar upgrades at Greene and Kings Cove earlier this year. These renovations are part of our ongoing efforts to enhance properties across our portfolio to force appreciation for our exits. Below you can find an awesome video tour of the enhancements made to Kings Cove.

Quarterly reports was distributed last week! Each report has a video from our Director of Asset Management filling you in on all the details of each property performance.

Why is this the case?

• Strong demand: Multifamily demand is at its highest rate since Q3 2021, driven by high interest rates that have limited homeownership for renters.
• Positive rent trajectory: Rent has increased by 1.1% in the last two quarters, but overtime remains relatively stable compared to other asset classes.
• Favorable demographics: The multifamily market is supported by favorable demographic trends such as domestic migration.
• Dwindling new supply: The number of new units being delivered is expected to be low in 2024.
• Investor sentiment: A CBRE survey found that nearly half of global investors surveyed planned to increase their multifamily purchasing activity in 2024.

Pressed for time? Catch the highlights from our latest investment webinar on The Townhomes at BlueBonnet Trails. Discover all the key insights and frequently asked questions for our final deal of 2024 in one concise video!

The post Viking Capital Newsletter October 2024 appeared first on Viking Capital.