February 24, 2018

Protect Your Income With Real Estate Tax Deductions

Whether you’re just starting on the path to accumulating wealth or you’re already a top achiever, find out how you can protect your income with real estate investment tax benefits.

Chandler Real Estate Tax Benefits

End of the 2010 is rapidly approaching – where will you find yourself for taxes next year? If Obama’s tax plan goes into effect, then those Americans whose taxable income is between $171,850 and $195,550 will be moved from the 33% tax bracket to a 28% tax bracket. That could bring about more than $1,000 in tax savings.

 A recent CNNMoney.com article pointed out that if the Bush-era tax cuts for the super wealthy expire next year, then those with a taxable income of $195,550, ($200,000 in adjusted gross income) and joint filers with taxable income over $237,300, ($250,000 in adjusted gross income) will find themselves in higher tax brackets – 36% from 33%, and 39.6% from 35%.

 Finding tax-advantaged ways to save for retirement could be more imperative than ever, especially for those who don’t want to outlive their money. Tax-deferred options, such as IRAs and 401(k) don’t give you the tax advantages you’ll want. With Arizona real estate prices dropping to record lows… buying up rental properties with “positive cash flow” for Chandler investment properties has become a regular thing for savvy real estate investors.   

Most real estate is purchased because of the real estate tax benefits that accrue for the owner to protect your income from taxation. Chandler, Gilbert, Scottsdale and Tempe investment real estate can be very effective at doing this. Deductions that are available for most real estate investments include:

     – Mortgage loan interest can be deducted to offset an equal amount of income. Borrowing $150,000 at 5% interest will yield an interest deduction of $7,500 during the first year of the loan, which can be used to offset $7,500 of income that would ordinarily be subject to income taxes.
     – Property taxes levied against investment real estate can also be deducted from taxable income. 
     – Insurance premiums for coverage of real estate investments are deductible from taxable income. Insurance premiums are not deductible for homeowners and great tax benefits for real estate investors.
     – Maintenance expenses are fully deductible in calculating the tax liability for a Chandler real estate investment. Expenses you incur for repairing rotting wood around the water heater or painting the deck are examples of costs that can be deducted from your other income, thus arriving at a lower tax bill. Being able to deduct those expenses is a very important benefit of owning investment real estate, one which is not available to homeowners.
     – Depreciation accounts for the decline in value of an asset over time, including most real estate. Depreciation decreases the accounting value (the value of the property as shown on financial statements) of real estate and at the same time offsets an equal amount of income from taxation, yet does not affect the market value of the property. Investors generally obtain maximum tax benefits by depreciating real estate as quickly as possible.  Residential rental property currently must be depreciated equally over 27.5 years.

 Whether you’re just starting on the path to accumulating wealth or you’re already a top achiever, find out how you can protect your income with real estate investment tax benefits.

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