Be informed of Tax STRATEGIES

If you’ve read my other blog posts, you’ll notice the theme—TAXES.

But the truth is, if you want to invest in real estate and learn to grow your money using the tax-free wealth strategy, you must understand real estate taxes to some degree. I am not saying you need to know everything, but you need an understanding to help you make decisions for your business.

Real estate offers several ways to lower your tax liability, making it a popular choice for savvy investors. Here are some key ways real estate can help you save on taxes:

Mortgage Interest Deduction: One of the most significant tax benefits of owning real estate is the ability to deduct mortgage interest payments. This deduction can result in substantial tax savings, especially in the early years of a mortgage when interest payments are highest.

Property Tax Deduction: Homeowners can also deduct property taxes paid on their primary residence and any other real estate investments they own. This deduction helps reduce the overall tax burden on property owners.

Depreciation: Real estate investors can use depreciation deductions on their rental properties. Depreciation allows you to deduct a portion of the property's value each year, even though it may be appreciating in the market. This can provide significant tax benefits and help offset rental income.

1031 Exchange: Investors can defer capital gains taxes by utilizing a 1031 exchange, which allows them to reinvest the profits from a property sale into a new property of equal or more excellent value without immediate tax consequences. This strategy can help investors grow their real estate portfolio without being hit by hefty taxes.

Passive Losses: Subject to certain limitations, real estate investors can offset passive losses from rental properties against other sources of income. This can help reduce overall taxable income and lower tax liabilities.

By incorporating real estate into your investment portfolio, you can take advantage of these tax-saving strategies and significantly reduce your tax burden. I want you to know that working closely with a tax professional is essential to ensure you maximize these benefits in compliance with tax laws. 

As always, this is written from my own experience. I am not a CPA. If you have questions about your CPA or want to meet with mine, I will gladly connect you!

Lot of Love,

Steph