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Orange County Real Estate

Tax Benefits of Real Estate Investment Properties

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Wow…do you get lots of great tax breaks. Real estate income properties are mini businesses and are treated as such in the tax code. I AM NOT AN ACCOUNTANT, SO CHECK WITH YOUR ACCOUNTANT to see how this might benefit you. Here are a few of the major tax items that work in your favor.

Using the 1031 Exchange

 
Wow…do you get to write off lots of stuff. Real estate income properties are mini businesses and are treated as such in the tax code. I AM NOT AN ACCOUNTANT, SO CHECK WITH YOUR ACCOUNTANT to see how this might benefit you. Here are a few of the major tax items that work in your favor.
Bullet The 1031 Exchange
  The ability to sell your current investment and buy a like kind property of greater or equal value and defer the capital gains tax on your profit. This is an amazing wealth building tool when used with the ability to borrow on the property.
Bullet Depreciation
  The building value (not the land) can be depreciated up to 27 years. Check with your accountant on this one. Some have been using less time over the depreciation cycle.
Bullet All expenses including mortgage interest is a write-off
  Be careful here. There is a big difference between an expense and a capital expenditure. Capital expenditure is adding or replacing something on the building that enhances the value (i.e. New roof, replacing the plumbing, remodeling a unit). Capital expenditures are depreciated.
   
 

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