Understanding And Minimizing Real Estate Tax

A Guide For Real Estate Investors

Every dollar of real estate tax that you can avoid (not evade!) or defer adds profit to the bottom line of your real estate investment business/investments. And considering that your tax bill can often be your largest annual expense, it makes sense that you not only have a solid understanding of how taxes affect your investment returns, but that you also understand your options for reducing, deferring and avoiding them.

Anyone who has written a large tax check to his or her partner (ie. government) knows just how painful it can be when you do have to do it. Yes, sometimes it is unavoidable. Last year I wrote my largest real estate tax check to date. $220,113. Believe me, it hurt to write that check. My only solace was the portion of the profits that I kept for myself, which did in fact go a long way towards easing my pain.

The goal of this website is to help you someday write huge checks to pay the real estate taxes on the huge profits that you have earned on your apartment properties.

(Need some help getting started in apartment investing? Here is an inexpensive e-course that focuses strictly on this subject.

On the other hand...

The goal of this real estate tax section of the website is to help you defer, reduce and avoid as much tax as possible right now and in the near future.

They are lots of areas to consider so let's take a look.

1. Are You An Active Or Passive Real Estate Investor?

Ever since Congress passed the Tax Reform Act of 1986, most real estate investments are now considered passive investments for tax purposes. In a nutshell this means that you can no longer write-off losses from your real estate activities against other earned/non-passive income (ex. salary, interest income, wages etc.) However, there are exceptions, specifically two of them.

Read more about these exceptions here.

2. Those Who Qualify As A Real Estate Professional Can Shelter Unlimited Amounts Of Non-Passive Income Using Losses Generated From Their Rental Real Estate Activities.

Out of the "Revenue Reconciliation Act of 1993" came the designation of real estate professional. Those taxpayers who meet the requirements to be considered a professional for tax purposes can shelter their non-passive income using losses from their real estate holdings. Find out exactly how you qualify here.

3. How To Claim Up To $25,000 In Real Estate Related Loses.

Get details of the "$25,000 Exemption" and determine if and how you can deduct some or all of your real estate losses from you non-passive income this year.



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