People invest in real estate usually because of its appreciation, constant returns, and the leverage opportunities, however, the tax benefits are too enormous to be ignored.
Real estate investment is one of the safest and surest ways of building wealth and it also offers one of the best if not the best of tax saving polices where you can legally and actually access grants, tax deductions, tax free transactions or get tax free loans and so many more privileges without much ado.
These are tips that you should know, but you may have probably not really given attention to them. These tips can save you a fortune and allow you to purchase more properties. I have highlighted a few strategies that real estate agents can advise, which will help their clients to save a lot of money that is invested, back again into the business for purchases.
Here are 7 amazing ways to save tax as a real estate investor:
- Easy access to tax-free loans
Real estate is one of the quickest and easy ways to access loans from the bank. Real estate investors should always be made aware of this fact, so that can maximize this opportunity that the asset which they have allowed them access tax free loans from the bank through a refinance and pay no tax on this debt. They will also keep the asset and other tax deductions packages accrue to them.
- Home Office Deduction
You can decide to work from your home so that you can utilize the tax deduction benefit gotten from working from your house. This means that you can actually deduct that portion of your home’s expense, such as mortgage payments, tax and insurance, utility payments, etc., related to your home office. Because the IRS’ has a new simplified option for deducting home office expenses. You can get between $5 deductions for each sq. Foot of the office space that has been chosen. The office space must be strictly used for business purposes. The $5 applies to the maximum area of 300 sq. Feet.
- Shelter cash flow using section 1031 exchange
Real estate investors will experience tax free transactions if they buy like-kind properties through tax-free exchanges, which also can be called a section 1031 exchange. This allows the investor to the liberty to buy a second property without paying tax on the first property that has been sold. The newly acquired property must be of “like kind” as defined by the IRS with the sold one.
- Completely eliminate tax on gains in real estate.
Your client should be aware of how they can completely avoid tax payment on real estates. Any investor can benefit from depreciation deductions while alive, all that is needed to be done is to just hold the property until death. His heirs will not have to pay any tax on that property.