I was frustrated with paying so much in taxes for years. Many investors are stuck in high income tax brackets when we first connect.
This video explains one of my favorite real estate tax benefits. Depreciation allows us to drastically reduce taxes on our investment profits. Connect with me to learn how you might be able to put powerful deductions to work for you.
Becoming a successful investor and reaping the financial benefits can be satisfying but sometimes the tax implications can be surprising for those striving to build long-term wealth.
This is why the wealthy appreciate turning tax burdens into tax savings through commercial real estate investments.
Consider this, The IRS allows owners of investment property to deduct “depreciation expense” for normal wear and tear of the building over time.
The larger the property, the greater the depreciation, and the more earnings you get to keep after taxes… allowing you to meet your financial goals sooner.
The IRS also allows investors to amplify deductions by categorizing the property’s components from short-term items such as lighting and appliances, to more enduring structural elements, like foundations and roofs.
Short-term components can be depreciated at an accelerated rate for dramatically greater tax deductions in the early years of ownership.
For instance, let’s say we purchase a ten-million-dollar Multifamily asset with twenty-five percent down. We might deduct over twenty percent of the property value, or two million dollars, in the first year and all the partners in the deal share in this tax benefit…
… If you invested a hundred thousand dollars in the same deal. You could expect more than twenty thousand dollars in deductions in the first year alone.
The deduction could be used to offset the income from this property or to offset passive gains from the stock market, the sale of another property or passive income from a business investment.
How you apply these deductions depends on your specific tax situation, so you should always consult a CPA about your specific tax situation.
To learn more about the many benefits of real estate investing, and how these tax deductions may help you better meet your financial goals, go to ‘Contact Us’ to schedule a free call.