There likely isn’t a business owner or investor around who doesn’t think that they are paying too much in taxes. For many real estate investors, taxes are one of the biggest expenses. Despite marginal tax rates being lower than any time in history, the tax bite still hurts, and it is possible to ease the pain to a degree. Here are several strategies that real estate investors can use to save on taxes.
Check Your Deductions
It may come as good news to learn that a majority of people are not taking nearly the amount of deductions that they are entitled to. If you are in business for yourself, there are long lists of deductions that you can take that will lower your tax bill. You’ll want to study up on these. Also, you can change some of your expenses or properties to allow for higher deductions. For example, you can get an additional license, hire a family member, or use a portion of your property as a rental to accelerate depreciation deductions.
An excellent strategy for real estate investors to save on taxes is to use the tax laws to build wealth. An S-Corporation is ideal for many businesses as you can run most types of expenses through them. You can also employ a 60-day IRA rollover option to finance a real estate deal that won’t expose you to taxes or penalties.
Use Sound Strategies
Staying organized can be a challenge for real estate investors. If you’re not, expect that you’ll pay more taxes. In line with being organized, plan both your income and expenses so that they fall within the right tax years and are the most beneficial to your business.
As real estate investors, there is are a lot of players and moving parts in your business. However, if you wish to maximize your profits, you’ll want to take the time to learn the tax code and make provisions for staying organized.
Liberty Commercial Capital is an industry leader in commercial financing solutions. Contact us to find out how our products can help your real estate investing business or to schedule a free consultation.