When it comes to real estate investments and taxes, it’s in the investor’s best interest to get educated about tax tips and requirements sooner rather than later in order to ensure that life remains pleasant when tax time rolls around.
Yesterday’s post included 5 real estate tax tips you should definitely ask your accountant about. Here are 4 more tax tips for real estate investors:
6) Spending massive amounts of money to fix up a property cannot be used as a deduction. The IRS only allows this type of deduction to be written off through depreciation over the course of several years. A smarter way to invest is to spend less money on maintaining the property, an expense that can be written off each year.
7) There is a $1.1 million limit on mortgage interest, which includes a primary residence and one additional property. You can bundle these properties together to get a larger deduction on them as one property, as opposed to two separate properties.
8 ) The IRS will allow you to deduct the depreciation value of personal property and equipment during the year it was purchased, according to Section 179.
9) Married couples who live in a home for two years or more can enjoy $500K of tax free profit on the sale of a house.
As always, our attorneys make us say it… this information is for reference only and you should always pass any tax tips or info you use for your business by a competent attorney and/or accountant in your local area to make sure they jive with all state, federal, and local law.
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“…A smarter way to invest is to spend less money on maintaining the property, an expense that can be written off each year.”
Do you mean spend MORE on maintenance since it can be written off each year, as opposed to fix up costs?