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Real Estate Investment Tax Benefits

By
Real Estate Agent with Realnet Tampa Bay

Real estate investment offers many benefits. Perhaps the most enticing is the tax deductions that are available to property owners. Real estate investment is seen as a business, so you get a few more breaks than if you’re just a residential home owner. This allows the protection of all your investment income from being overly taxed. The following lists some tax deductions that are available to real estate investors.

    1. Mortgage loan interest can be deducted on your tax return, just like it can for a regular home mortgage. This is very convenient, as it allows you to offset some of your income from that property!
    2. Everyone has to pay the dreaded property taxes, whether you own residential property, commercial property, or empty land. Luckily, these taxes are tax deductible for investment property owners.  Obviously, the higher your property tax bill, the greater the tax savings.
    3. If you’re a home owner, you can’t deduct your home owner’s insurance premiums. However, if you’re an investment property owner, you can! The premiums you pay to cover your real estate Investment Properties are deductible on your tax return.
    4. I’ve said before that you often have to do a lot of repairs and renovations on bank owned properties. The repair costs, as well as regular maintenance expenses, are also tax deductible on your tax return. Examples of these kind of expenses include repairing a damaged ceiling or repainting the walls. Maintenance costs can add up fast, especially on older properties, so being able to deduct those expenses is a very important benefit of owning investment real estate. Keep in mind that property improvements are treated differently than repairs or maintenance. These are counted against any gain when you sell the property.
    5. In accounting, depreciation represents a gradual decline in value of an asset over time. You can depreciate your real estate investment property on your taxes, therefore reducing your taxable income. Realistically, we all know that homes actually appreciate (rise in value) in an optimal market; however, the IRS requires depreciation to be recorded over a set period of time. This depreciation is strictly on paper; it doesn’t affect the property’s market value. Current regulations require residential properties to be depreciated equally over a time period of twenty-seven and a half years, while commercial investment property must be depreciated over thirty-nine years.

Have any other questions about the benefits of buying investment property? View our foreclosure listings to see our current selection of Florida

Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Great reminder * many of my new clients do NOT understand they have lots of tax deductions against their rental income INCLUDING my management fee....best of both worlds - they have an investment and they can move out knowing that their property is rented and saving them TAXES

Apr 25, 2012 08:23 PM
Dale Baker
Baker Energy Audits and Commercial Properties Inspections - Claremont, NH
New Hampshire Relocation Real Estate Information

Howdy Greg

Welcome to the ActiveRain Real Estate blogging community! You'll sure find a lot of mighty fine folks here in the community to get to know. I'm one of the many ActiveRain community members which are Ambassadors.

If you should ever have any questions about how to do anything or about the rules of the ActiveRain community, please feel free to contact me either by sending me a e-mail or by giving me a call, I'll sure be mighty glad to give you a helping hand. If for some reason I don't know the answer to a question which you might have, I'll sure will find out the answer and get back to you with it.

Take the time to look at the different groups within the community, pick some different groups to join, post your bolg posts in them, be sure to take the time to read the posting guidelines of each group you might want to join, you'll sure will want to follow them. Members can join as many or as few of the different groups within the community as they would like to.

Take time to read blog posts of other members within the community and leave a comment on the blog post of other members which you visit. By taking the time to do that many of the other members will also take the time to visit your blog posts and leave you a comment.

Members are able to post their blog posts in 5 different groups at a time in the community. The comments which you leave on others blog posts, need a minimum of 10 words to receive the 25 points for them.

Keep up your mighty fine job of posting! I'll be looking forward to seeing even more blog posts written and posted by you, plus seeing you join some of the mighty fine groups in the community.

Have a good one
Dale in New Hampshire

Apr 26, 2012 11:36 AM
Ken's Home Team LLC. | 360.609.0226 | Portland, OR & Vancouver, WA Real Estate Team
Ken's Home Team LLC. - Vancouver, WA
- SOLD IS OUR FAVORITE 4 LETTER WORD -

I wanted to say HELLO and CONGRATS!!! On joined ActiveRain, You have made a GREAT Choice!!!!!  I have been a member for over 2 years now and it has been amazing for me and my business check out my blog. I would like to add you to my network Check out my Profileand Please add me to your network and I will ad mine to yours, also, if you need any help please feel free to call me or email me.  I offer this because I also want to get to know you and when I have a referral I know a person in your city so I can send YOU Business!

Again, feel free to contact me if you need any help with ActiveRain.

Thank you,
Ken

May 09, 2012 12:29 AM