More and more people are buying real estate, especially single-family homes and condos, as investments. Real estate can be not only a great investment, but also a great way to shelter taxes. More and more investors look at real estate as the most ideal way to convert into assets for the added value of earning tax benefits.
To help you make the best decision when thinking of investing in real estate tax free; you need to have some knowledge about some basics;
1. Tax Free Loans: When thinking of getting the most out of investing in real estate tax free make sure to think about borrowing cash. The best approach is to borrow from a bank through a refinance and pay no tax on this debt as an investor. How this helps the cash is a tax-free loan, plus the investor can keep the real estate asset and tax deductions
2. Exchanges: According to the Section 1031 exchange as a real estate investor; you can buy like-kind properties through tax-free exchanges. Also an investor can buy a second property without paying tax on the sale of the first property.
3. Combinations: By combining a 1031 like-kind exchange with depreciation deductions, an investor can avoid taxes on both the cash flow and gain from a real estate sale. Through a tax-free exchange, the investor not only avoids tax on the gain from the real estate, but he or she also gets to use the bank’s money to purchase the property and gets all the tax basis and depreciation. The bank does not get any of it. To ensure success with these more complex transactions, we highly encourage you to refer clients to an excellent tax adviser.
4. No Tax: You can also advise clients that they can avoid real estate taxes completely. An investor can benefit from depreciation deductions while alive, hold the property until death, and then the heirs will not have to pay any tax. The next time you work with a client, you’ll be a hero for sharing these real estate tax-free investment strategies. Simply by mentioning this information, you’ll increase their trust and loyalty because it shows you are thinking about their financial success way after the sale closes. Tax-free loans, like-kind exchanges, depreciation and tax elimination are all valuable options that can save your clients millions over a lifetime.
With proper planning, investing in real estate can create huge tax reductions for you; feel free to contact for more information at www.sukhbhaura.com