A recent study performed by university economists revealed that the average American-less 40% to 50% of their income every year to the tax man. These taxes include federal income taxes, state income taxes, property taxes, sales taxes, and use taxes to name a few. As you can see, with the AVERAGE American losing around 40% of their income to taxes, it is no wonder that taxes are often the # 1 erosion of our wealth. By now, it should come as no surprise to you that the tax bill for the Majority of individuals in our country will be going up and it will be going up SOON. Starting on January 1, 2011, there are a handful changes to the tax rates, tax deductions, and new legislation may cause taxpayers to lose Which of even bigger chunk of their paycheck to Uncle Sam.
What great news !Some of you may be wondering why I am referring to the upcoming tax Increases as great news. Why would we want to pay more taxes? How to increase in tax rates would help me to massively increase my return on investment in my real estate deals
And the answer is simple: Tax Write-Offs! As a CPA and a tax strategist, many of you may already know that real estate is one of my personal preferred investment choices. Why? Because real estate is one of the few investments available allow a taxpayer to receive Which monthly cash flow and appreciation while claiming a tax loss at the sametime.
For the new and seasoned investors, let?s take a quick moment to go into the details on this powerful tax loophole called depreciation. What does depreciation is It allows the investor to take a portion of the property?s purchase price and expense it on their tax return little by little over time. This rule is a great loophole the IRS has given us because they have a working theory that real estate ? similar to all other assets, will go down in value over time. Now this is probably true for computers or furniture that you invest in. .. but WE all know that real estate actually goes up in value over time. So with the depreciation rules, what?s happening is that the IRS is Allowing the investor to take a tax deduction every year on property that may actually be going up in value. As you can probably tell already, the depreciation expenses alone are so high Typically, the investor that wants to show gene rally overall loss on their tax return EVEN THOUGH they are making positive cash flow month after month on the property! This is one of the main reasons that I, as a tax strategist, encourage people to invest in real estate. Again, not only is a smart real estate investment vehicles ? but it is one that is extremely preferred tax as well. Simply put, depreciation is an interest free loan from the IRS and Allows the investor to take a write-off for money not yet spent! In addition to depreciation, there are of course all the other normal tax write offs that can help to reduce the taxes of the investor seeking as travel, meals, education, marketing, and auto expenses to name a few.So how does this result in MASSIVE cash flow for us as real estate investors? This is important because YOUR CLIENTS CAN BENEFIT FROM THIS INVESTOR! This information may Provide you with some great opportunities to raise some capital investor!
It is important for all of us as investors, new and seasoned alike, to make sure we are communicating the amazing tax benefits of real estate investing to our investor clients. The higher the taxes increase, the more powerful and the greater the need exists for tax deductions. If you are leveraging your deals with investor money, make sure to take the time to clearly and Effectively communicate to your clients on the Power of depreciation and how your investments can help them to build their wealth, while saving taxes year after year.As the saying goes, Knowledge is Power. Delivering useful and relevant information to your investor clients can be the key to building massive wealth and cash flow for your real estate business
Copyright ? ? 2010 by Amanda Y. Han, CPA
id=?article-resource?> CPA KEYSTONE, INC. Maximizing Profits& Increasing Wealth
www.keystonecpa.com
* We welcome suggestions for future topics that you would like to hear about tax saving strategies Relating to real estate investing. So please email your suggestions to me directly at ahan@keystonecpa.com .
Amanda Han is a managing director at Keystone CPA Inc., a firm specializing in tax mitigation strategies for business owners and real estate investors. For complimentary top-notch tax mitigatin strategies, visit http://www.keystonecpa.com and sign up for the Monthly Newsletter and Member?s Libraryhttp://EzineArticles.com/?expert=Amanda_Han
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