Here are the top 10 tax benefits of owning real estate:
- Mortgage Interest Deduction: You can deduct the interest paid on your mortgage, which can significantly reduce your taxable income.
- Property Taxes: You can deduct property taxes paid on your real estate, which can reduce your overall tax liability.
- Depreciation: Real estate investors can also take advantage of depreciation, which allows you to deduct a portion of the property’s value each year as it depreciates in value.
- Capital Gains Exclusion: If you sell your primary residence and meet certain criteria, you may be able to exclude up to $250,000 of capital gains from your taxable income (or $500,000 if you are married filing jointly).
- 1031 Exchange: A 1031 exchange allows you to defer paying capital gains taxes when you sell one investment property and reinvest the proceeds into another similar property.
- Deductions for Repairs and Improvements: You can deduct the costs of repairs and improvements made to your rental property, which can help reduce your tax liability.
- Home Office Deduction: If you use a portion of your home as a dedicated office for your real estate business, you may be able to deduct certain home office expenses.
- Travel Expenses: Real estate investors may be able to deduct travel expenses related to their real estate business, such as mileage, meals, and lodging.
- Deductions for Professional Fees: You can deduct the costs of hiring professionals like attorneys, accountants, and property managers to help with your real estate investments.
- Passive Losses: Real estate investors may be able to offset passive losses (losses from rental properties) against other passive income, which can help reduce your overall tax liability.
Keep in mind that tax laws can be complex and may change over time. It’s important to work with a tax professional who is familiar with real estate tax laws to ensure that you are taking advantage of all available tax benefits while also complying with applicable regulations.
If Real Estate investing is of interest to you, please see our ‘Learn more about New Hampshire‘ link below to learn more about the communities we recommend investing in and why.
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We specialize in identifying single and multi-family investment opportunities. We target the Seacoast, Monadnock, and Lakes Regions of New Hampshire.
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