Real estate is a great way to accumulate wealth for retirement. Any type of property when bought correctly can help provide the property owner with tax advantages that few other investments can provide. Owning real estate be it rental houses,land, office buildings, shopping centers or any other type of real estate presents the owner with many challenges but the end result can be more than rewarding. So why let much of that hard work go to waste. Since 2013, taxes on the sale of real estate have increased and new taxes have been added.
Capital Gains Taxes
Capital gains taxes have increased and depreciation recapture is taxed at 25%. 43 states have state income taxes which must be paid. In addition, your CPA can advise you whether or not the Obamacare tax and the Alternative Minimum Tax will impact sales proceeds. And after all that, whatever income is generated from what is left to invest may be taxed at ordinary income tax rates. A good CPA would be invaluable to tell you based on the specifics of your situation. But it may get better….for Uncle Sam. There are few offsets for investment income so it is possible that all of the investment income may be subject to taxes at ordinary tax rates rather than passive income rates.
So this brings up a rather complicated question. Why? That’s right. Why would you subject all of your hard work to so much taxation when you may have other options. Yes, there are options and that’s why Creative Real Estate Strategies was formed. Give us a call and let’s see if we can help.