Real Estate’s image as a great investment has taken a beating over the last several years. It’s a shame such a great investment tool has had its image so badly tarnished by the bad behavior of a few. Well, no matter how bad it appears on the surface Real Estate is still an amazing investment tool. Just the tax deductions alone make it a solid investment. Couple that with appreciation and cash flow from investment property and Real Estate is still, one of the best places to invest your hard earned dollars!
For an investor there are few vehicles that make it easier to use the banks money to work for you. Real estate allows you to make a down payment and leverage your capital, thereby increasing your overall return on investment many times over. This also allows you to significantly reduce the tax impact to your cash flow on investment properties by writing off mortgage interest and depreciation. In many cases that cash flow would be tax-free. Wait , did he just say tax-free cash flow? Yes, the vast majority of investors will not pay taxes on their cash flow! There is also a good chance, depending on your individual income level that any overage of tax deductions can be used against your other income. Your tax professional will be able to go over these strategies and advise you what is best for you and your individual situation.
Ok, so you don’t want all the “Headaches” of investing in real estate. You just want some nice tax benefits and want to invest some money now and get a great return 20 years from now. Buy a house! Simple as that. Stop renting, stop making someone else all that tax free cash flow. According to the National Association of Realtors Uncle Sam helps you in 3 ways when you own your own home.
First when you buy your home, the IRS says loan discount points and origination fees are tax deductible to the buyer regardless of who pays them. So even if the seller pays your closing costs you still get the deduction!
The most commonly known deduction is the mortgage interest deduction. You can deduct interest charged on a loan used to acquire your principal residence in the year that it is paid. This amounts to most of your monthly payment in the early years of your mortgage. You can also deduct interest on an additional $100,000 of mortgage debt, which can be used for any purpose. This is known as the “Home Equity Loan” exception, and it allows you to tap into your home equity for any purpose. This allows you to shift debt from non -deductible interest such as credit cards to deductible interest from home equity. Please be aware that failure to pay this debt can cause you to lose your home to foreclosure, so this like all things must be used with care. Again, I know like a broken record, talk to you tax professional reagarding all things tax related.
The best by far though is at the time of sale! If you have owned and occupied your principal residence for at least 2 of the last 5 years you can earn up to $500,000 if you’re married, $250,000 if your single, on the sale of that house and pay no federal income tax at all! You can do this as often as every two years for the rest of your life.
Whether you are an investor or a homeowner who just want some tax write offs, real estate is still an amazing way to make your money grow and, more importantly to keep as much of your hard earned cash as you can.
If you are interested in learning more about the amazing investment vehicle that your home and real estate in general can be call 888-518-3339 or go to www.thehurstagency.com to register for our upcoming, no obligation training.
If you are interested in getting a current market analysis on your current home or investment properties call 888-518-3339 or go to www.thehurstagency.com for a no cost, no strings comprehensive market analysis.
Let's talk soon!
Curtis
The Hurst Agency
Curtis W Hurst, Realtor and CEO
888-518-3339
curtis@thehurstagency.com
WWW.TheHurstAgency.com
"One of the greatest discoveries a man makes, one of his great surprises, is to find he can do what he was afraid he couldn't do." -- Henry Ford
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