Real Estate Investment Tax Strategies For Savvy Owners

Whether you are buying it, selling it or holding on to it, real estate taxes are something that everyone must deal with. However, there are several real estate investment tax strategies that may help to prevent you from pulling out your hair on a regular basis. Sound good? Keep reading.

If your primary residence is doubling as a real estate investment, which means it is appreciating, then you may be exempt from any proceeds realized from the sale of the property up to a certain amount. The exemption amount will vary depending on whether you are single or married and is only valid if the proceeds are received from the sale of your primary residence.

When investing in real estate, it’s equally important to recognize the right time to buy and sell the property. Not only that, but one of the most essential real estate investment tax strategies involves you deciding whether to sell it as a cash purchase or through owner financing.

The latter will consist of installment payments and may result in a tax headache unless a professional advisor can specifically help in making sure that your forms are properly prepared and submitted.

If you own a piece of investment property that is currently being rented, such as an apartment complex or rental home, deducting certain activities that occur throughout the year is one of the most popular real estate investment tax strategies in existence.

Property management, regular maintenance, necessary repairs, property taxes and other expenses that are directly related to the upkeep of your investment property can be used as deductions and are very important when it comes to real estate investment tax strategies.

One of the most effective real estate investment tax strategies is to hold onto the property. How so? While you own a piece of investment property, you are only paying the annual property taxes and/or association dues.

Any appreciation that occurs is not taxable until the property is actually sold, which makes for a terrific savings in more ways than one. When you sell a piece of investment property, other than your primary residence, you will be required to pay taxes on the profit of the sale.

A capital gains tax is calculated based on the sale price less the purchase price and the IRS also requires that you confirm the amount of time that you held the investment.

If you have decided that it’s time to sell your investment property, take a moment to consider some alternatives in real estate investment tax strategies. Have you ever heard of house swapping?

If you want to sell your property with the hopes of buying a new one, why not try exchanging it instead? If you exchange properties, you may not be required to pay taxes on the trade or any additional equity that may have been realized with the exchange.

The information in this article is designed to be used for reference purposes only. It should not be used as, in place of or in conjunction with professional advice relating to real estate investment tax strategies or tax advice in general.

For additional information, potential tax deductions, strategies and/or savings, investors should consult with a local tax advisor who can help to answer questions relating to their individual situation.



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