There are many investments and vehicles to save money in taxes, but one of the best if not the best investment for minimizing your tax liability is real estate. I am not going to tell you this is the best strategy for you, but I am going to tell you that this is the best tax shelter if you are in the upper tax brackets.
“Tax law is a series of incentives. The big picture policy is that the government would like to encourage investment in real estate,” says Tom Wheelwright, CPA. Tom is a contributor to Donald Trump’s Wealth Builders Program as well as an advisor to the Rich Dad Poor Dad institution.
Owning real estate allows you to utilize depreciation. “The number one benefit from investing in business or rental real estate is depreciation. “Say you paid $1 million for a building, including the land. Since the land doesn’t wear out, there’s no depreciation deduction for the portion of the price that relates to the land, but that leaves a large amount of the price related to the building [typically, 80 percent] to depreciate every year,” says Mr. Wheelwright. The standard depreciation time in California is over 27.5 years. Please consult with your CPA or tax advisor for the correct time.
Real estate is not a get rich quick scheme, we recommend investing in real estate as a long-term asset. Depending on the situation and income, the tax benefits could be equal or greater than the cash flow and appreciation received from the properties.
Flipping properties is another enterprise to which many investors are drawn. And while it can be profitable, it’s a completely different animal, and highly volatile. Please call or e-mail if you have questions about your next real estate investment.
For more information on how you can use real estate to save money, or about available properties that are not currently listed on-line, contact us at firstname.lastname@example.org (949) 607-8543 or visit us online at www.digonzinigroup.com & www.dighomes.com.
The DiGonzini Group: “The foundation of our business is built on you.”
Terry R. “Why Real Estate Investment Is Your Best Tax Shelter.”Accountingtoday.com. N.p., 20 Jan. 2015.