Still on the fence about getting your feet wet in the Real Estate Investment Pool?
- Real Estate Tax Write-Offs – You can amass expense deductions that are direct costs from your investments such as:
- Property tax and insurance; Mortgage Interest; Cost to maintain and repair the building.
- The costs of running your real estate business: Advertising, Office space
- Business equipment and materials, legal and accounting fees, related travel
- Depreciate Costs Over Time – Depreciation is the incremental loss of an asset’s value, generally due to assumed wear and tear. If you own income-producing rental property, you can lower your taxable income by deducting this depreciation as an expense on your taxes.
- Take Advantage Of Capital Gains – Capital Gains Tax may be assessed when you sell property, for a profit. There are two types to be aware of: short-term and long-term. They each impact your tax situation differently.
- Short-Term Capital Gains – When you profit from selling an asset within a year of owning it, you realize a short-term capital gain.
- Long-Term Capital Gains – A long-term capital gain applies if you profit from the sale of an asset that you’ve held for a year or longer. if your income is low enough. That means you can keep every cent of the profit you get when selling a property.-
- Be Self-Employed Without Having to Pay FICA Tax – When you’re self-employed, you generally need to pay both the employer and employee portion of the FICA tax (covering Social Security and Medicare). However, if you own rental property, the money you receive isn’t classified as earned income so you’re eligible to avoid the FICA tax, also known as the payroll tax.
I invite you to visit my Youtube channel for additional information on real estate investing including: Top 5 Missed Deductions for Real Estate Investors and How Depreciation Creates Millions in Tax Savings and Freed Capital for Real Estate Investors
Key Takeaway
You don't have to choose between your financial goals. Start by taking advantage of available employer benefits, then balance your remaining savings between short-term priorities and long-term financial growth. Keep money needed in the near term in an appropriate low-risk option, and consider the tax implications before using long-term savings.
