|
Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investing - Introduction
Real Estate Investing - Real Estate Investment Tax Considerations
Many people think that if they have the capital and the credit, that they
can quickly purchase a home, make some changes and repairs, and quickly sell
it again for a profit. That is true, in most cases, as long as you take the
tax law into consideration. People who don't do this quickly find that by
ingorning the complicated tax laws that relate to real estate, they actually
lose money, or at the very least, don't make the profit that they expected.
Before investing in any property - for any reason - it is highly recommended
that you consult with a real estate tax expert or real estate attorney! Do
not skip this vital step in the investment process, as it should be your
very first step! It is also important that you realize that tax laws that
relate to real estate vary from one city, state, and country to another,
and you need to know the tax law that applies to the real estate that you
are considering - specifically!
For instance, many investors believe that the tax laws that pertain to their
primary residence applies to investment property that they do not live in
as well - and this just is not true! Any type of investment income - even
that acquired by the sell of a property that was not your primary residence
- is considered a capital gain, and taxed as such. If the property was owned
for a year or less, it is a short-term gain, and it will be taxed at the
regular income tax rate. This rate may be as high as 35%! When property is
held for longer than a year, it is usually taxed around 15%, because it is
considered a long term capital gain.
If you own a home for 730 days, and live in it as your primary residence,
when you sell that home - after the 730 days - you won't be taxed at all
on the income derived from that home, as long as you reinvest the money into
a home of equal or greater value, which will also be used as your primary
residence. Obviously, this law doesn't do a real estate investor much good,
but in the United States, there is the 1031 exchange.
The 1031 exchange allows you to exchange one investment or business property
for another investment or business property and defer the tax that is owed.
The property has to be an income producing asset, as opposed to being a personal
property. Furthmore, you only have 45 days to specify up to three replacement
properties for the exchange, and you must close within 180 days! There must
also be a facilitator, a neutral party, to hold the funds and keep records
for the 1031 exchange.
Again, before taking advantage of, or even considering the 1031 exchange,
consult a tax accountant or a real estate attorney to find out how the rule
can be applied to your specific situation.
If you are married, you can profit up to $500,000 on the sale of your personal
residence without being taxed, but if you are single, you can only profit
up to $250,000 without being taxed. When it comes to tax deductions, mortgage
interest deductions are very important, and up to one million dollar loans
can qualify for the deduction, and points and loan fees can be deducted as
well.
Make sure that you keep good records, and that you confer with professionals
before making any investments in property. Know what you are truly getting
into before you sign on the dotted line, and you will come out with the profit
that you expected!
 |
 |
Previous |
Next |
|
Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
Search for Beginners Real Estate Investing Information
|
