Archive for the ‘Taxes’ Category

April 7th, 2011

The Tax Advantage Aspect of Real Estate Investing

So What Is The Tax Advantage Aspect of Real Estate Investing?

Real Estate Investing

Real Estate Investing Tax Advantages

For a good number of persons who have finally made the big decision to throw in their hat into real estate investing, leverage and appreciation are the main reasons why they feel that it is a good investment for them. True enough, even with the downward trends in the market in the past few years, things are finally picking up and appreciation is creeping in. But did you know that Real Estate Investing can also give off other financial perks like tax advantages.

Present tax laws provide real estate investors the opportunity to make significant deductions on their incomes which would then lower their annual tax obligations . You don’t only lower your payments, but you will also be able defer tax claims on your profits, as well as protect your money from otherwise larger tax rates reserved for those in higher bracketing.

These tax write offs are not available for everybody and are commonly available for real estate investors. Not all of the real estate tax perks and advantages apply to every situation, but knowing that they exist and what they are for will help you save tens to hundreds of thousands.

Rental Real Estate Investing Advantages

One of the tax advantages that can be utilized by real estate investors that maintain rental real estate is the tax deduction for property deprecation. In this type of tax advantage, an investor can equally spread his property improvement costs over a certain period of years. As a rule, this tax advantage can only be applied to real estate with developments and not with bare land properties. So you can only claim deductions on the developments, such as the building, and to the improvements that you have done with it. A government representative will calculate the allowable tax deductibles for depreciation, and the number of years it will be spread. For rental residential buildings, this is typically 27.5 or 40 years.

Another tax advantage that real estate investors can enjoy with real estate investing are the preferential tax rates on capital gains as compared to rates on regular income. Briefly, capital gains are the profit that is gained after an asset is sold. The American government has allowed these lowered tax rates to entice persons to make capital investments. President Obama has extended these rates, a maximum of fifteen percent down to five percent for those in the lowest two tax brackets, which would have ended in 2010 to 2012. This though is applicable for long term capital gains, investments that have been held for more than a year.

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December 2nd, 2010

Bush Tax Cuts 2011 calculator

Found a good website to calculate your 2011 income taxes based on Bush tax cuts expiring vs Obama Budget plan vs Democrat plan vs republican plan. It is only an estimator. Hopefully you find it to be pretty accurate. Let me know if you find something to add to this post by leaving me a comment

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