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Can I deduct Life or Health Insurance Payments on my Taxes?
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If you own rental property, you may be
able to deduct life and health insurance payments on your taxes.
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What?
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Costs to insure rental property are deductible... |
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Huh? |
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Depending on how you structure your rental business, you may be able to cover your life and
medical insurance as part of the rental business... |
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Okay...
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| Structuring your rental property
business as a Limited Liability
Company (LLC) may permit you to deduct these costs for
you and your family...
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Right...
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You may want to refer to IRS Publication 535 to learn more about business expenses.
Be sure to consult with a tax advisor to consider your specific circumstances. |
To learn more about how to take control of your Real Estate
Investments and Taxes, check out RealTaxTips at
TReXGlobal.com.
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The Best Way to Market to Real Estate Investors! |
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The Inman Conference in San Francisco was a wonderful event. One of the greatest things was being able to interact with other fellow ActiveRainers in person (Mike Mueller, Tina Merrit, and Mara Hawk just to name a few, but that's another story).
I'd like to take this opportunity to introduce the service we shared at Inman. So far, everyone from ActiveRain loves the idea, so I thought it would be good to share. My company (TReXGlobal.com) has a FREE Real Estate Partner Program to help you double your business by co-branding our free web tools for investors. You will get a unique link that you can put on your website to convert your web visitors into leads. Your business will increase as you help your clients save thousands of dollars. The best part: it's free for you and your clients!
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| What You Get: |
What Clients Get: |
- Unique Link that you can distribute
- T-ReX Web Tools Co-Branded byYOU
- An Easy Way to Serve Your Clients
- SuperHero Status with Investors
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- YOUR Co-Branded Web Tool
- FREE Property Management Software
- Confidence in Your Ability to Serve their Needs
- Easy Way to Save Time and Money
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It will take you 5 minutes, and then you're DONE!
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Here's How it Works:
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- Create a Simplify'em Partner Account
- Personalize Your Co-Branded WebTool
- Share your Link
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(Whenever someone signs up using your link, contact information for your lead will be emailed to you)
What's in it for you? You can provide a valuable service to help your investors save, at no cost to you or your clients, and you get all the credit! Isn't that a great way to increase business with your prospects?
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No Loss Limit for Real Estate Professionals and
Spouses?
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Real Estate Investors qualify as "real estate professionals" if they spend at least 750 hours per year on their investment activities. A real estate sales license is not required and either spouse can qualify. Real estate brokers, realty sales agents, property managers, builders, contractors and leasing agents are all considered real estate professionals if they spent 750 hours on real estate business.
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For
Example: |
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Say your Adjusted Gross Income (AGI) is $160,000, and as a result, you are not entitled to any
rental investment loss deductions because your AGI exceeds $150,000.
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However, if your spouse manages your real estate properties and spends more than 750 hours annually supervising the properties, making management decisions, inspecting properties, and supervising property sales and exchanges, then your spouse qualifies as a "real estate professional".
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The result is that you and your spouse can claim unlimited property loss deductions from your properties because one of you qualifies as a "real estate professional."
To learn
how to take control of your Real Estate and
Taxes, check out RealTaxTips at
TReXGlobal.com. |
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Is it Better to Use Actual Expenses or the
Standard Rate?
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You can deduct vehicle costs
on your taxes using actual vehicle expenses
or the standard mileage rate.
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Actual
Expenses: |
Standard Rate: |
-Collect Receipts
-Write-Off Expenses that
are Deductible |
-Log Mileage
-Deduct using
Standard Mileage rate |
The STANDARD RATE may
be more beneficial for individuals who have
a lot of mileage and low vehicle costs.
Using the ACTUAL EXPENSE method is only
better when your vehicle costs are very
high.
The standard mileage rate is used to figure the deductible cost of a vehicle that is owned or leased. For Tax Year 2008,
the IRS is allowing taxpayers to deduct 50.5 cents
per mile driven for the first 6 months of 2008, and 58.5 cents
per mile driven for the final six months.
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FOR EXAMPLE |
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A person who
spent $10,000 on gas but only traveled 10,000
business miles would want to use the Actual
Expense Method because it can yield a larger
deduction than the Standard Mileage Rate. |
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Actual Expense
Method |
Standard Mileage
Rate |
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$10K deduction
for gas expense |
$5.85K standard deduction
(10K * 58.5 Cents) |
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Use the Method that is most Advantageous!!!
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A person who
spent $5,000 on gas and traveled 20,000
business miles might benefit more from the standard
mileage deduction. |
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Actual Expense
Method |
Standard Mileage
Rate |
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$5K deduction
for gas expense |
$11.7K standard deduction
(20K * 58.5 Cents) |
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Pay attention to specific rules about listed property, depreciation limits (which change often), and switching accounting methods.
Whether using the standard mileage or actual expense deduction, be sure to track mileage and expenses related to your rental activity.
You usually won't know which method to use until the end of the tax year, so it's best to just keep a good record of all vehicle activities.
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To learn how to take control of your Real Estate and Taxes, check out RealTaxTips
at
TReXGlobal.com.
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Is it Better to Give a Gift or Entertain???
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Most expenses are deductible as long as they are
ordinary and necessary for your business. You can deduct up to 50% of
entertainment costs, or gift costs up to $25 each.
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Entertainment: |
Gifts: |
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Deduct up to 50% |
Deduct up to $25 |
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Generally, an item that
is considered a gift is also considered to
be an entertainment expense.
If you give an item that is intended to be used at a later date
(like tickets to a performance or event),
it is usually considered a gift.
Sometimes you will have
the option of deducting those costs as a
gift or entertainment expense, depending on
the circumstances.
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FOR EXAMPLE
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If You Go With Them
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If You DON'T Go With Them
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Treat the cost as an entertainment
expense, do not deduct as a gift expense.
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Treat the cost as a gift or entertainment
expense, whichever is more advantageous.
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Use the Method that is most Advantageous!!!
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If Raiders Tickets cost $40
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If the tickets cost $40, you'd
rather treat it as a gift cost so you could deduct
$25. If you deducted it as an entertainment expense, you could
only deduct $20.
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If Raiders Tickets cost $100
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If the tickets cost $100, you'd
rather treat it as an entertainment expense so you can deduct $50.
If you deducted it as a gift cost, you could only deduct $25.
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To read more tips about Real Estate and Taxes, check out RealTaxTips
at
TReXGlobal.com.
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Ever Considered Selling Property To Yourself???
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Selling property to your own S-Corporation
can be beneficial in TWO specific
situations. |
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1.) You do not meet the requirements for
excluding capital gains on the sale of your
primary home
2.) You can not
take advantage of depreciation on
appreciated property |
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By selling to
S-Corp, you can: |
For Example:
You lived in a property for 3 years,
and rented it out for the next 7
years. Since you haven't lived there
for 2 of the last 5 years, you
cannot sell the property as a
primary residence and avoid the
capital gain.
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However, after moving out of the
property, you sold it to your own
S-Corporation, which allowed you to
exclude capital gain because
requirements for the primary
residence two-year rule were met.
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Take Advantage of the 2-Year Rule |
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The other
advantage is: |
For Example:
You purchased a home for $50k many
years ago, and it is worth $500k
now. If you decided to just rent it
out, the basis for depreciation
would be the original basis of $50k. |
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But,
after selling it to your
S-Corporation and then renting it
out, you can depreciate the new
basis of $500k.
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new basis on the appreciated property |
Clearly this will bring you
substantial tax savings....
But be careful!
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Selling to your S-Corp isn't for everyone!!! |
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Avoid this
strategy if: |
For Example:
You sell your primary residence with
a gain of $240k to your S-Corp, and
pay no tax due to the exclusion. |
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However, if you could not meet the
exclusion, the $240k gain would be
taxed at ordinary income tax
rates... it would have been more
beneficial to just sell the property
and pay capital gains tax of 15%
instead. |
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you cannot take advantage of the exclusion
amount |
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To learn more about how to take control of your
real estate investments, check out RealTaxTips
at
TReXGlobal.com.
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You should hire someone (like a family member) to do your work and write off the cost of labor,
since you cannot deduct the cost of your own labor.
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For Example:
if you paint your rental property or install a
lock using your own labor instead of hiring a
painter or a locksmith, you cannot deduct any
expenses for labor. |
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SO YOU SHOULD HIRE A FAMILY MEMBER!!! |
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If you hire a
non-owner (like your child or possibly your spouse), the
costs are deductible against your income because they
are considered to be business expenses.
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There's no catch and
it's A-OK with the IRS. You will have more control over
lowering your expenses while still keeping the ability
to write them off.
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To learn more about how to take control of your real estate investments, check out
RealTaxTips at
TReXGlobal.com.
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Niman Singh |
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Have you ever had
to deal with a CASUALTY LOSS?
Here's why I ask:
Losses incurred because of a
casualty, disaster, or theft can be tax-deductible. |
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These losses may be
limited, but they are certainly deductible. |
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For Example:
Your tenant runs their car through the garage door |
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Even though you haven’t replaced the garage door, and don’t have any expenses
to write off because you didn’t fix anything, you can deduct the cost of damages incurred as a
casualty expense. |
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The loss you claim will
be reduced by any reimbursements you receive
(like insurance). |
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To claim a casualty loss,
you must full out IRS Form 4684.
To learn more about how to save
money and lower taxes using real estate investments, check out
these resources.
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Niman Singh |
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Summer is coming around, I'm
starting to plan my next vacation...
...and I am going to share a little secret.
You might have tried all the tricks in the book, but I'm
sure you haven't tried making your VACATION
TAX DEDUCTIBLE.
For example, you fly with your spouse
(aka your business partner)
to Orlando to scout and purchase a rental condominium.
Since this is a business trip, you can deduct the cost of all business expenses,
like travel, lodging, and services.
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Ordinary and necessary expenses are tax
deductible, and that's why you can deduct the cost of
expenses incurred while looking for new property.
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It wouldn't matter if you spent some time walking on the beach or
even if you made a stop at Disney World, just as long as more than half the
time you spent away on travel was spent doing business; and the
primary cause for travel was business.
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Obviously you can't just write off your hotel
and travel to Disney World just because you're thinking about buying Cinderella's Castle.
Be sure to consult with a professional. |
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To learn about all the
different ways to take advantage of real estate investments, visit
our sites.
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Niman Singh |
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Many people get confused about how to treat points, so I hope this
post is helpful. In this blog, I am focusing particularly on what to do when the Points
are Paid by the Buyer. For Points Pre-Paid by the Seller,
read my previous blog... |
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A point is interest that has been pre-paid in an effort to "buy down" the fixed interest imposed on
a mortgage.
In a property SALE (not refinance), if Points are Paid
by the Buyer:
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If you are the BUYER:
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For Personal
Property |
For Rental
Property |
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Deduct all points as mortgage interest on Schedule A |
Deduct points over the life of the loan on Schedule
E |
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| Keep in mind,
this post is regarding points paid on the sale of property.
Points paid during a refinance are treated differently. As always, consult with a tax advisor
to be on the safe side. |
To learn more about all the
different ways to save money on real estate investments, visit
our sites.
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Niman Singh |
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Niman @TReXGlobal.com
Fremont, CA
More about me…
TReXGlobal.com
Office Phone: (510) 979-9066
Email Me
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