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5 tAx beneFits when inVesting in reAl estatE
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Andres Vieira
·2 min read

Today in SERDNA TALKS we are going to talk about finances.

All this information is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of said information. 

If you are thinking about investing in real estate, let me tell you that it can be a smart financial move, as it allows you to build wealth over time and potentially generate passive income.

In addition to the financial benefits, there are also several tax benefits that can come with investing in real estate. Here are five tax benefits to consider when investing in real estate:

  • Tax deductions for mortgage interest and property taxes: As a real estate investor, you can claim deductions for the mortgage interest and property taxes you pay on your investment properties. These deductions can significantly reduce your taxable income and save you money on your taxes. We highly suggest working with an attorney or a CPA that specializes in real estate. 

  • Depreciation deductions: When you own an investment property, you can claim depreciation deductions for the wear and tear that occurs over time. This means you can write off a portion of the value of your property each year, which can also lower your taxable income.

  • Capital gains tax exclusion: If you sell an investment property for a profit, you may be subject to capital gains tax. However, if you have owned and lived in the property for at least two of the past five years, you may be able to exclude up to $250,000 of the capital gain from your taxes (or up to $500,000 if you're married and filing jointly). Remember to file for a homestead exemption if it's your primary residence.

  • 1031 exchanges: A 1031 exchange allows you to defer paying capital gains tax on the sale of an investment property by using the proceeds to purchase a new investment property. This can be a useful strategy for real estate investors who want to continually grow their portfolio without being hit with a large tax bill. If you do this the right way, you will be able to save $$$ and then you will use it to buy more properties.

  • Opportunity zones: Opportunity zones are designated areas that offer tax benefits to investors who invest in the area. If you invest in an opportunity zone, you can defer paying capital gains tax on the sale of an investment until 2026 and potentially eliminate it entirely if you hold the investment for at least 10 years.

We think that investing in real estate can provide a number of tax benefits that can help you save money on your taxes and at the same time help you grow your wealth over time. It's always a good idea to consult with a real estate attorney, financial professional or a tax advisor to fully understand the tax implications of your investment decisions.

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