Real estate investing should be done carefully by those with the money, education and experience.
Be careful selecting the properties. Foreclosures can be good opportunities, but short sales are probably safer.
Financing for investment properties is hard to get, and some bankers charge three points with 20% down and only 1.5 points if you put down 25%. Credit scores should be in the range of 680 plus, and interest rates on investment property loans run in the 5s.
People should know what is tax deductible when an investor buys, owns, and operates a rental property. 
1. You are not allowed to write off the down payment. This expense is part of the basis of the property and is not deductible on your tax return. However, you get some deduction from depreciation.
2. Closing costs are not deductible in the first year. These are added to the basis of the property and are deducted via depreciation over the useful life of the property.
3. Points are deductible on rental property only ratably over the period of the loan.
4. When you sell an income property, your mortgage balance is not deducted from the selling price to determine your taxable gain or loss.
- Formula for taxable gain in real estate investing is selling price less selling costs and your basis in the property.
5. Income received from rentals owned in foreign countries is taxable income.
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Source: Real Estate for Investment, What it Means for Your Taxes, Fox Business News. This is for information only and is not providing tax or legal services. You should always consult with an income tax professional or certified public accountant about your personal or business tax situation.
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