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Real Estate Investment: What Are The Ways To Drive Up The Profits?

Real Estate Investment: What Are The Ways To Drive Up The Profits?

Mon, 10/14/2013 - 10:58 -- Real Estate
Real Estate Investment: What Are The Ways To Drive Up The Profits?Posted By: Basij Lorena To Real Estate

Every year you, as a responsible citizen of the country, file your tax return on 15th April. You share a part of your hard earned money with the government. However, being a real estateinvestor, you could take advantage of some unique opportunities to reduce the impact of taxes on your bottom line.

In this case, you need to position yourself right to reap full benefits of the tax benefits that you can qualify for.

Tax tips for real estate investors

Here are some of the tax tips that you could use to lower your annual taxes and drive up your profits:

  • Organize yourself - This particular advice is relevant and certainly applicable anywhere, but then it pertains to taxes especially. Though it is difficult to find, yet there are no excuses to run an unorganized business. Essentially, organization is one of the most crucial skills of an entrepreneur, particularly real estate investors.
    They need to keep a detailed record of their expenses, receipts and proofs of all transactions made throughout the year. Having all these well-documented is critical when tax season arrives. So, if you have the ability and the time, then self-managing the task of bookkeeping may be a viable option for you. To help you with these, there are some very good accounting programs to ease off the load from your shoulders.
    However, you can do the bookkeeping on your own during the initial days of your company’s establishment, but it would be better, if you get a professional accountant to do the work, as your business grows. Most of the entrepreneurs get to know that it is better for them to manage their business, instead of slogging it out with their company’s accounts. Therefore, it would be best, if you could put a proper system in place to keep track of all the daily activities and to archive them.

  • Exploit real estate investments - A lot of rules have been put into place to provide better returns on investments and the same goes with real estate. One of the fabulous options would be to buy rental properties. This is because as an investor you’ll be able to depreciate the structure of your rental home for the next 27.5 years.
    As result of this depreciation, you’d offset any sort of cash flow income, your rental home may be generating. More, it’ll appreciate in value without increasing your tax burden. However, when you sell off that property, then it’ll be considered as capital gains tax and not as an income one that is generally higher.