Frances Kern Mennone

Grok picked Lars. Lars, I will send you a DM

Real estate won't make you rich. It can help you stay rich. SpaceX prices its IPO tomorrow and trades Friday under SPCX. Thousands of early investors and employees are sitting on the largest capital gains of their lives. Here is what real estate can do for them, with real numbers from a deal we just filed taxes on. After a liquidity event, real estate does three jobs at once. No other asset does all three. The first job is growth. Buy in a market with economic tailwinds. Then buy in the neighborhood that sits in the path of growth within that market. Then buy a deal where you control the outcome because you run the renovation and the management. Stack all three and appreciation stops being a bet on luck. The second job is sheltering income. The IRS lets you depreciate a building while it makes money. Add interest expense and a new property can show a large paper loss in a year when cash flow is fine. Those losses are passive. They offset passive income from other rentals and syndications. They cannot erase a salary unless you qualify as a real estate professional, which has strict tests most W-2 earners fail. For an investor with gains and passive income spread across many deals, these losses are gold. The third job is the tax free exit. A 1031 exchange lets you trade buildings your entire life without paying tax on the gains. Your heirs inherit the portfolio at a stepped up basis. The deferred tax bill dies with you. The Opportunity Zone structure goes further. Invest a capital gain within 180 days of the sale. Hold for 10 years. Pay zero tax on the appreciation. And the depreciation you deducted along the way never gets recaptured. Here is what that looks like in practice. We built a 76-unit apartment building in the Cedars, just south of downtown Dallas. Total cost was $19.8M Investors put in $8.2M and a bank lent the rest. The 2025 return is filed. The K-1s show a $4.3M loss. That is 53% of the equity, in year one. A cost segregation study broke the building into parts with shorter lives. The One Big Beautiful Bill Act brought back 100% bonus depreciation. We deducted all of it the year the building opened. The building sits in an OZ census tract. Every investor came in with a capital gain. The $4.3M loss is just tax year 2025. Depreciation keeps running every year of the hold. Over a 10-year hold, the deductions climb well past that first number. So at year 10, the appreciation on a $19.8M building is tax free. And every dollar of depreciation taken across the entire hold never comes back as recapture. Most tax strategy pushes the bill into the future. This structure deletes it. Now back to SpaceX, because the timing matters more than people realize. An IPO does not create a taxable gain. A sale does. The 180-day Opportunity Zone clock starts the day you sell your shares. Sell at the IPO this week and your window closes in early December. You land in the original OZ program. The deferral is short, but the 10-year exclusion still applies in full. Most insiders cannot sell this week. Lockups hold them until winter. Sell after the lockup and your 180-day window crosses into 2027, when the new permanent OZ program begins. That version adds a rolling five year deferral and a basis step up on the original gain. Same stock. Same gain. A few months of timing changes which tax program you get. The IPO creates the wealth. The 180 days after you sell decide how much of it you keep.