Are you looking to make money through real estate investing? If you are, you are not alone. However, real estate investing is a tricky business. There are some real estate investors who are successful, while others are not. If you are interested in becoming a successful, profitable real estate investor, you will want to make sure that you know exactly what you are doing, when buying real estate investment properties. That is why it is advised that you do your on research or signup to take a real estate investment course or class.When it comes to taking the time to thoroughly examine real estate investing, there are many hopeful real estate investors who wonder why they should bother. Many assume that buying real estate properties, fixing them up and then renting or selling them isn’t a complicated process, but there is more to being a real estate investor than just putting a purchase offer on a property and doing a few repairs. By taking the time to actually learn about real estate investing, you are more likely to become a successful real estate investor.One of the reasons why research increases your chances of seeing success and profits is because there are many real estate investing tips out there, just waiting to be found and used. What many do not realize that is many real estate investing tips, which include both dos and don’ts, are composed by successful real estate investors; those who have seen profits themselves. Getting your information from a successful, proven real estate investor is your best chance of success. This is because the information or tips that they give you are relevant, as they have often tried them out first hand. For that reason, you may want to look for real estate books or real estate courses that are written or being hosted by successful real estate investors.Some of the many tips covered in many real estate investing books and real estate investing courses include tips on buying the bests properties, as well as how to make those properties rentable or sellable. As a real estate investor, you have the decision to fix up a purchased property and then resell it or become a landlord. Many real estate courses and books cover both real estate investment approaches, as well as outline the chances of success with each. As a real estate investor, you are your own boss; therefore, you are able to make your own decision, as to what type of investing you would like to do, but seeing information on past investors and their success may give you good ideas; ideas that could help you become a successful real estate investor.In short, if you are serious about becoming a real estate investor, you will want to take a real estate investment course or purchase a collection of your own real estate investing books. When it comes to becoming a successful real estate investor, research cannot be emphasized on enough.
Real estate investing tax breaks are one of the big reasons many investors buy property. As an investor, you can write off all sorts of things that will end up reducing your taxable income, and therefore, reducing the amount that you owe.Just to give you a feel, here are some of the things you can deduct that you’re probably already spending money on in your real estate investing activities:
Travel to go see your property (Maybe it’s even in the same city as your in-laws or your favorite beach vacation spot)
Interest on your mortgage for the property
Insurance on the property
Property Management, Accounting, Legal Fees, Accounting, and other professional advice
Training and education associated with your property
Repairs and Maintenance at the property
But remember, you can’t charge for your own time working at the property, you can only account for things that you pay someone else to do. So, the next time you’re wondering whether to pay the neighbor’s kid to mow the lawn at your rental property or do it yourself, remember, you’d be paying him with pre-tax dollars.Don’t buy a property JUST to save money on taxes…Tax savings can really add up! They can turn a property that puts money into your pocket every month into a tax write-off. But remember, it’s not all fun and games. You still have the responsibility of finding a good deal, managing your property, and selling it when the time is right. Don’t buy a property JUST for the tax benefits alone (a lot of people who did that got wiped out – bankrupted! – in the 1980′s when the tax law changed and their tax write-off’s went away.) Always make sure your property fundamentals are sound!Knowing When To Sell To Maximize Tax BreaksKnowing When To Sell To Maximize Tax Breaks Speaking of selling property, bear in mind that one of the purposes of the tax law is creating incentives for you to do certain things. The government is rewarding you (with tax breaks) for taking desired actions.In the case of real estate investing, the government wants to reward you for holding property long term (over 1 year) as affordable rental housing in many cases – rather than having you get rich with short term fix-and-flip strategies.If you hold the property for less than a year, the government treats your income as short-term capital gains tax, which is taxed at your ordinary income tax rate (that’s HIGHEST of your tax brackets, usually).To get the lowest tax rates, hold the property for at least a year and your profit on the sale will be considered long-term capital gains and the tax treatment will be much better. Currently, long term capital gains tax rates are just 15%, but President Obama has suggested he will raise the tax rates to 20-25%… so stay tuned!)If you don’t want to pay any taxes at all when you go to sell your property, consider participating in a 1031 Exchange, or Starker Exchange (same thing, different names). This is a transaction in which an intermediary helps you sell one property and then buy another similar investment property. You can roll all your profits from the sale of the first building into the purchase of the second building. If you do – you won’t pay any tax on the new building! Do your own research, but it’s worth getting more information on 1031′s if you’re selling a property with a lot of equity and want to make sure you’ll minimize your tax bill!Real Estate Professional StatusLong term capital gains tax treatment isn’t the only real estate investing tax break in jeopardy… The Real Estate Professional status is also getting harder to qualify for. Real Estate Professional is an IRS designation which says you spend at least 750 hours a year working in real estate investing, and that real estate is your primary business. If you qualify for this designation, you have the ability to deduct ALL your losses from real estate, even if they are in excess of $25,000/year. If you don’t qualify, your real estate deductions may be limited, especially if you are a passive investor not actively involved in real estate investing, or you have an especially high income.Another bug-a-boo in the land of real estate investing tax benefits is the AMT or Alternative Minimum Tax. This is a tax that hits high income earners if they have too many tax deductions, even if those deductions are legitimate. Congress keeps patching this, but it’s hitting – and hurting the middle class. If you earn more than about $130,000/year this may affect your family, so consult with a tax advisor to see if you’ll be able to take advantage of the real estate tax breaks you’re expecting.More Real Estate Investing InformationPlease, as you read through this article, bear in mind that I am not an accountant or tax attorney. I am another investor like you and I am just sharing from my own personal experience. Tax law is complicated and changing, so I encourage you to consult with your own team of professionals on any topics that you need more information on or strategies you plan on implementing.