Real estate is commonly considered a solid way to build wealth and gain financial freedom. The tax benefits of real estate can help that processl. What too often goes unmentioned are the tax implications that go along with it. Here are some tax benefits you should take advantage of when tax season rolls around.
How to Reap the Tax Benefits of Real Estate: Depreciation
Most of the time, if a property depreciates in value it can be a discouraging thing. After all, the only thing that makes real estate an asset is its ability to earn you money. If it depreciates that means you lose money, right? Well, not necessarily, or at least not when it comes to taxes. Property value depreciation allows you to take a tax deduction based on the depreciated value. This lowers your overall tax liability, even if you are still turning a profit on the property due to rental income.
Deductions aren’t the only way to reap tax benefits associated with real estate. There are tax credits available that you can take advantage of as well. The credits you can use will depend on your specific circumstances and investments. Some of these tax credits include real estate investing credits, rehabilitation credits, low income housing credits, and green tax credits. Green tax credits will vary depending on location. However, you may be able to use them to offset the cost of improvements like installing a solar panel system. Solar panel systems can cost more than $10,000, so taking advantage of tax credits can be beneficial.
How to Reap the Tax Benefits of Real Estate: Mortgage Interest Tax Deductions
Unless you’ve managed to pay your mortgage off already, you’re going to be accumulating interest on the loan. That tends to mean more money out of your pocket. But, as with property value depreciation, that isn’t entirely a bad thing. If you itemize your tax deductions, you can deduct the amount you’ve paid towards your mortgage interest from your income. It has the potential to be your biggest real estate tax deduction. This serves to decrease your taxable income, which helps reduce your tax liability.
Taxes can be complicated. But when it comes to real estate taxes, it pays to take advantage of available opportunities. Property value depreciation isn’t entirely a bad thing. There are multiple tax credits you can take advantage of, as well as deductions on your mortgage interest. Figure out what tax benefits you can take advantage of to reduce your tax liability.
If you want to get started in real estate investing, join the SWFL REIA today!
See you at a meeting soon!
The Southwest Florida Real Estate Investment Association is the leading source of SWFL real estate investing events that provide investment education and networking in southwest Florida. We analyze the housing market and foreclosures and provide information, education and networking events in order to build a network and knowledge base for investors and potential investors. Our members include real estate agent, brokers, investors, hedge fund managers, rehabbers, wholesalers and more.
Our SWFL REIA General Meeting is held in Fort Myers where we provide education on hot topics in investing and an opportunity to enjoy the camaraderie of your fellow investors. You’ll get a chance to ask for advice from successful real estate professionals and even make a few deals on your latest projects.
To become a member, anyone can register as an individual, a couple, or a corporation. Being a member opens the doors for endless networking opportunities, advice from members with decades of experience, new ideas from entrepreneurs, camaraderie with those just beginning, and deals and contracts done in the meeting room. For those interested in Cape Coral rental property investment and/or Fort Myers rental property investment, SWFL REIA will be able to provide a network to help launch a successful investment career.
The SWFL REIA is known and respected as a source of current, actionable and useful information about the housing market in the area that we meet.
We meet twice a month.
One of the premier sources for real estate investing networking and education is the SWFL REIA. In the real estate world, the SWFL REIA is different in that they do not do information product sales. Their meetings are focusing on the best ways of investing in real estate by collaborating with other property investors who are sharing their experiences.
We look forward to meeting you at a meeting soon!
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