Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.
For most, tax season is a time of year they do not enjoy. We understand that most people do not like taxes and most definitely do not like paying them. Real estate investors enjoy great advantages in building wealth and passive income while keeping tax liabilities down. There are even greater benefits for those who expand real estate investments or get started with real estate investing in 2018.
This is a non-cash deduction that spreads the cost of an asset over multiple years. This paper expense can protect other income from taxes and reduce your tax bill. The Tax Cuts and Jobs Act has opened a new window of opportunity for investors and property buyers to enjoy a 100% first-year bonus depreciation deduction. This break is retroactive for 2017 tax filings on property acquired and in service by September 2017. This break will be available until 2022, when it begins to be reduced by 20% per year until phased out.
Many investors use debt leverage to buy real estate. Leverage magnifies the profits mentioned above. The interest on debt is deductible as a business expense.
To raise cash most investors consider selling investments. This leads to taxes or complicated procedures to minimize taxes. Another option is t pull capital out of an investment tax-free by refinancing.
Reduced Pass-Through Taxes
Pass-through income from business entities such as LLCs now gets a 20% deduction on qualified income. This allows successful existing real estate firms to expand and enjoy better profitability while making it more appealing and advantageous to launch new real estate startups or get started in real estate investing through legal entities like limited liability companies.
1031 Tax-Deferred Exchange
A 1031 Exchange is a transaction in which a taxpayer is allowed to exchange one investment property for another by deferring the tax consequence of a sale. The transaction is authorized by 1031 of the IRS Code. Executing and completing a 1031 exchange requires meeting specific criteria.
When a taxpayer sells a capital asset on an installment note with the buyer making payments over time can choose to spread the income from the sale over the life of the installment note. Spreading the capital gains income over multiple years can reduce the amount of tax compared to reporting the entire gain in one year.
The key benefit of the installment sale strategy is spreading capital gains income over time.
Retirement Account Investments And Contributions
IRAs and 401k retirement plans are incredible tools to build wealth while minimizing taxes. Taxpayers can self-direct these to invest in real estate rather than tradition investment vehicles. While self-directed IRAs are a great tax planning tool, there are many pitfalls and strict rules to be aware of.
Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.