New to real estate investing? There are many tax benefits of rental property…
Perhaps you have considered real estate investment, drawn to the idea of generating passive income. Or Maybe you already own investment property and would like to add to your portfolio. Regardless of where you fall on the spectrum it’s important to understand not only the real estate market, but also the tax benefits of rental property, or owning investment property. Making a smart real estate investment will allow you to retire with rental income with out overpaying Uncle Sam.
When Should I Invest
You may wonder when the right time would be to jump into the market. Well, the time is now. With homeownership rates at their lowest level in 50 years, now might be a good time to explore the opportunity. There are several factors for the shift away from homeownership. The fast rise in home values making them less affordable, and young Americans. The millennials are holding off on life decisions such as marriage and buying a home until later in their life. The resulting trend is that they are staying in rentals well into their 30’s. Renters in the baby boomer generation has also increased. With all these factors in place creates a booming rental market. With renter households growing at a faster rate than owner households, landlords are at an advantage in the rental market.
“Don’t wait to buy real estate, buy real estate and wait.” -T.Harv Eker
Tax Benefits of Rental Property/Cash in under the new law
How does the new law effect investors? The 2018 Tax Changes have taken away some benefits from home owners but gave real estate investors additional deductions. Owners of investment properties could get up to 20 percent deduction of their net rental income. This tax benefit of rental properties has been overshadowed by the changes in deductions for home owners. The tax benefits of rental property for investors will reduce the mortgage interest and property tax deductions, but do not apply to interest and property taxes.
Deduction for qualified business income of pass-through entities
The pass-through provision lets owners of pass-through entities deduct up to 20 percent of their business income on their personal tax return. Pass-through entities pay no business tax. Their income passes through to their owners and is taxed at their personal tax rates. Is it now time to incorporate? And if so what entity should I choose? To speak with a tax professional on which entity is right for you click Here.
How to retire with rental income without overpaying Uncle Sam
To find out more about investing in real estate, creating passive income, and the tax benefits of rental property watch the KDA seminar. In this video Karla Dennis and Kathleen Kramer, of Liberty Real Estate Network, discuss how to:
- Turn a $50K investment into $10,000 a month
- Build a robust portfolio
- How to leave the real estate business and retire
- Trade up without being taxed
Karla Dennis
Karla Dennis, Tax Expert & Business Strategist
As seen in Forbes Magazine, Karla Dennis is an expert tax and business strategist. As an enrolled agent, Karla is licensed to represent taxpayers in all 50 states. She holds a Masters in Taxation and Business Development and is the author of two books, Tax Storm and Against the Odds.
Karla, the founder of consultancy firm Karla Dennis & Associates™, has saved her clients' thousands of dollars and has been featured in various media outlets such as Forbes, MSNBC, KTLA, Yahoo! Finance, and SmartMoney, marking her as the ultimate tax expert.
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