Better Tax Benefits for Investors Than For You As A Homeowner.

A primary and powerful tax benefit of real estate investing is earning tax deductions using what’s known as rental properties depreciation. It is an important factor for you to consider. In general, the tax benefits of real estate investing are pretty great for you in the United States. Not only is there the 30-year fixed-rate loans that never keep up with inflation, which is a miracle in itself but on top of that, you get to use depreciation to your advantage.

“In other countries, people are astounded that in the U.S., when an investor buys a home that will very likely appreciate in value over the years, but for tax purposes, it's considered like a car, that goes down in value so you can take a loss. What kind of a country does that? Well, a great country. So this is a serious tax benefit. The tax benefits of real estate investing are much better for an investor than the tax benefits for homeowners." -Adiel Gorel, owner of International Capital Group

Investing in real estate is a solid way for you to build wealth and reduce taxes through a variety of means. Depreciation affords you the recovery of costs related to income-producing rental property. So what is rental properties depreciation in its simplest terms? Depreciation is the recovery of the costs associated with the upkeep of your real estate investment properties through annual tax deductions. As time passes each year, the real estate will naturally begin to break down. The depreciation deduction is in essence a recompense for that natural “wear and tear,” it’s a tax benefit of real estate investment properties. This is a great benefit for you throughout your career as an investor.

There are even more deductions to take advantage of and Adiel Gorel is hosting a free virtual event for you to answer your questions and of course the most pressing question of 2022 which markets to invest in during this time. Join us, click icgre.com/guide. Adiel Gorel has helped thousands of investors just like you to understand the tax benefits of real estate investing and build financial security through real estate investing.

Here’s where it seems too good to be true but it is true. For tax purposes, depreciation is always considered a net loss on real estate investment properties, independent of any profits on the property.

The allowed deduction amount is determined by the property’s market value, the property’s recovery period, and the depreciation method used. The most commonly used rental properties depreciation method is called the modified accelerated cost recovery system, which allows you to deduct depreciation on a residential property for 27.5 years!

Real estate investors like you can take further advantage of available tax benefits by investing in real estate through limited partnerships and limited liability companies. These provide for additional business-related deductions. That is a huge benefit to you as an investor and by extension your family that homeowners don’t get to take full advantage of.

Investors gained some great benefits thanks to the Tax Cuts and Jobs Act of 2018. The act enables businesses that earn qualified business income (QBI), which includes rental income, to pass up to 20 percent of their taxable income. You can do this by using a pass-through deduction. This reduces the effective income tax rate by 20 percent for you, which is quite the reduction. This tax benefit is available until 2025. However, there is a chance it might be renewed after that as well so keep your eye on it.

Another smart move for you is to get a 30-year fixed-rate loan, which inflation is now going to erode the value of overtime. Another 15 years go by, and all of your real estate investment homes are worth a million dollars each, for example, you have a lot of taxes to pay, but the wise investor chooses to do another 1031 exchange to expand the portfolio and walk squarely on the path of becoming very wealthy, and still didn't have pay all that depreciation recapture. Those are some pretty spectacular tax benefits for you of real estate investing.

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Created on Apr 20th 2022 02:01. Viewed 67 times.

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