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Real Estate Guides Investor's Guide Tax Benefits of Real Estate Investment Properties
Real Estate Guides Investor's Guide Tax Benefits of Real Estate Investment Properties
Last Updated on Monday, 14 April 2008 14:11 Written by Administrator Thursday, 29 November 2007 13:38
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.
 | 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. | |
| 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. | |
| 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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In every transaction there is usually a request for repairs given to the seller by the buyer. The work order is usually backed up by a third party inspection report. The following is a list of some possible work orders. The work orders must be completed prior to closing and the seller is responsible for having them done. Check with your local authorities for specific requirements. 
A plan is something that most people over look when going into a new home purchase and if you don’t have one it could cost you lots and lots of money. A good REALTOR® will be able to help you with your plan. The biggest issue with your plan is TIME.