Real Estate Tax Incentives

Lower Your Taxes

Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit.

For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn't pay them). These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these "losses" can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense -- you are not actually spending any money -- the tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of the U.S. Tax Code.

Have a Positive Cash Flow

There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow. Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow -- whether it be pre-tax or after-tax -- requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea.

Use Leverage

One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage.

Benefit from Growing Equity

While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD's, the return on investment for real estate purchases can often be greater.

The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it's time to sell or refinance. Determining the proper amount of equity may require the assistance of a real estate professional.

Neda Dabestani-Ryba is a licensed Realtor in Maryland. She is a member of the President's Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/ Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity

Related Articles:

Online MBA at University of Phoenix
This article reviews the Online MBA Course at University of Phoenix. It is interesting to note how students' reviews vary from very positive comments to very negative comments for the Online MBA Course offered by University of Phoenix. Some students had even established a website just for the purpose of criticizing the program.

The Key to Real Estate Investing Success Revealed!
How did you get into real estate investing? Did you read a book on it? Was it a seminar? A meeting of some sort with speakers dispensing real estate investing information, but really selling courses? Did you get really, really jazzed and pumped up by these simple ("not easy") concepts that were delivered to you in parable form from the stage by a charismatic speaker?Did you find yourself levitating to the back of the room, powerless but to slap down your plastic to buy the kits that were being sold there? Like, "Yes Mr. Ker we do take traveler's checks.

One-Piece Fascia Board / Shingle Band Saves Home Builders Time and Money
Cedar Knoll Log Homes, a leading Adirondack log home designer and manufacturer, introduces its new one-piece fascia board / shingle band. Cedar Knoll Log Homes is producing this new fascia board / shingle band product in standard dimensions of 2 inch by 8 inch by 12 feet, available in both white cedar and white pine. Custom cut dimensions, trim options and species are available by special request.

Sand Castle Realty Group Inc. Is Currently Interviewing Real Estate Agents For Their 100 Percent Commission for $100/Month Program
Sand Castle Realty Group Inc. Is Currently Interviewing Real Estate Agents For Their 100% Commission for $100/ Month Program To Add To Their Existing 86 Professionals.

Tips Designed To Help Every Homeowner Survive The 2008 Real Estate Market From Americas Watchdog's Homeowners Consumer Center
According to Americas Watchdog's Homeowner Consumer Center, "the 2008 US real estate market could be one of the worst in US history". In order to protect US homeowners, the group has come up with a list of suggestions and resources designed to assist anyone in the US who owns a home. The group has indicated that the 2008 US real estate market is a mine field, and homeowners need to be extremely careful. The Homeowners Consumer Center's 2008 tips should be helpful to anyone who owns a home in the US. The Homeowners Consumer Center is the number one resource in the United States for homeowners advice and information.

Grab Quick Profits As Real Estate Prices Soar
Real estate values rise and fall in cycles. Currently home prices are nearing a top in many areas.

Alliance Group Entertainment's "Hotel California" Set to Premiere at The 9th Annual New York International Latino Film Festival Presented by HBO
The stylistic psychological crime drama "Hotel California" to premiere in NYC.

A Valuable Golf Swing Tip
No serious golfer will fail to be eager and maybe even desperate for a golf swing tip that actually works. This is because of the simple reason that a golf swing is the most important single aspect of a good golf game and yet for most golfers, it ends up being the most frustrating, causing many to swear never to set foot on a course again.

Park City Real Estate and Deer Valley Real Estate Reviews
UtahNewsLinks.com will offer market news on Park City real estate and Deer Valley real estate. Interviews will be conducted throughout the Park City and surrounding areas to assess the market's value.

Requirements for SSDI Eligibility in California
Are you a resident of California and presently planning to file for Social Security Disability benefits? Well then, you have to know if you are eligible for the benefits first.