The Benefits Of Investing In Real Estate
With all of the mixed-media messages surrounding us these days, it's confusing for people to know where to invest their money (be it stocks, bonds, a 401K or real estate).
In my experience there's no better way to save a bundle on your taxes (while simultaneously building your wealth) than through investing in real estate...
Here's why...
Huge Tax Benefits - Properties typically appreciate while the IRS allows you to write your properties off as depreciating.
(This one benefit alone allows me to write off thousands every year!)Using "Good Debt" to Build Wealth - "Good Debt" is debt that makes you money where as "bad debt" does not, it just makes your further in debt... The benefit of "good debt" is LEVERAGE because you don't need to have a lot of money to get started - you can start with the equity from your home.
A Balanced Investment Portfolio - You've heard the expression, "don't put all your eggs in one basket", well the same applies to investing. By investing in real estate (in addition to other investments such as your IRA, 401K, stocks and bonds) you will have a stronger and more stable investment portfolio...
A Personal Retirement Plan - Can we even count on Social Security as a retirement option any more? When managed correctly, investment properties are a very good potential source of passive income for when you retire.
Deferment of Capital Gains Tax - When you sell an investment property, if you made more money than you bought it for, that's called your "Capital Gains" and Uncle Sam will tax you on that gain. However, the government allows you to transfer that gain into another "like kind" property by using a 1031 tax exchange. This allows you to bypass taxation by deferring the financial gain into your next investment.
Instant Equity - It's possible to find investment properties that are $5k, $10k, $15k (or more) below market value. When an investor buys properties like this, he or she can instantly use the equity from this for additional buying leverage.
Long Term Growth - My method for real estate investing is about buying and holding properties for the future because I know that their value will almost invariably continue to increase
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