The best way to get ready for tax season is to be prepared. You should make sure that throughout the year you save your expense receipts and also your charitable donations information. You should also make an appointment with your CPA. The more records that you have will increase the amount you receive back on our tax return.
There are five tax saving strategies that will save you the most money on your tax return.
If you sold a property during the year, you can use the 1301 exchange strategy. That is where you defer capital gains by using the profit from your sold property and purchasing a new property. The replacement property must be comparable to the sold property and must be an investment or business. The purchase price also must be the same or higher than the previously owned property.
The second strategy is using business tax deductions. The expenses that can be submitted can be expenses due to having a home office, a business phone, and internet bill, gas when you travel to your rental, mortgage interest, employee pay and insurance. Full time or part time real estate investors can submit these expenses.
The third strategy is long-term capital gains. You can use this strategy if you have held on to an investment property for more than a year. You will be taxed less on capital gains by holding onto the property longer.
The fourth strategy is depreciation. If you own a property for a long time, you can use tax deductions to recover the cost to keep up the property over its life time. A property is going to have wear and tear over time. Only rental owners can use this strategy.
The last strategy is using an IRA for real estate investments. You can withdraw money from your IRA without penalty if you invest in real estate. Once you return the money back to your IRA you will not be penalized. You can use the money without being taxed.
Don’t let tax season tiptoe up on you; stay prepared and minimize stress as well as what you owe! #Ironclad
- 1Deductible expenses must be common and helpful for people in your line of work.
- 2Your income level impacts the rate you pay for long term capital gains.
- 3Have a system for storing tax information. All expense receipts, donation receipts, income statements all in one place.