Real Estate

How to Maximize the Tax Benefits of Rental Property

Rent to Win: Understanding the Income and Tax Benefits of Rental Property

Have you thought about purchasing a rental property? Great! You have the opportunity to generate additional income, save for retirement, and improve your tax posture. To unlock the full income and tax benefits of rental property, it’s critical that you do the following 5 things first:

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Defer Capital Gains With Section 1031 Exchanges

If you’re a savvy investor, you probably know that you must generally report any mutual fund distributions as income, whether you reinvest them or exchange shares in one fund for shares in another. In other words, you must report and pay any capital gains tax owed.

But if real estate’s your game, did you know that it’s possible to defer capital gains by taking advantage of a tax break that allows you to swap investment property on a tax-deferred basis?

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IRS “Safe Harbor” for Section 199A Rental Properties

Safe harbor! It sounds wonderful.

Obviously, you are going to be comfortable in a safe harbor. And if you said you don’t want comfort, you might be thought of as a little loony.

You may sense that we are not jumping with joy about this new safe harbor for Section 199A rental property. It’s true; our joy quotient is a little low on this safe harbor because of the work involved.

Our feeling is that you did this work, so your property is a trade or business with no safe harbor needed. Of course, the safe harbor gives you comfort, so we need to examine what’s involved.

With the new safe harbor, the IRS thinks it is your new friend when it comes to claiming the Section 199A 20 percent tax deduction on your rental real estate profits.

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Russo CPA Renewable Energy Tax Credits New Information for 2022 2023 Tax Season

Renewable Energy Tax Credits Now Available

Qualifying commercial and rental property owners who are interested in renewable energy projects—take note! You may qualify for significant tax credits or deductions through the new Inflation Reduction Act. Although the rules and details are quite complex,  the benefits may be very worthwhile. Be sure to call our office for all of the qualifying information and details, but in the meantime, check out the opportunities below to see if any could be a fit for you.

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Homeowner Records: What to Keep and for How Long 2022

Homeowner Records: What to Keep and How Long

Keeping full and accurate homeowner records is not only vital for claiming deductions on your tax return, but also for determining the basis or adjusted basis of your home. These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. You should also keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis.

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Reverse Mortgages: What to Know

Reverse Mortgages: What To Know

Home equity represents a significant portion of the average retiree’s wealth. If you’re 62 or older and house-rich but cash-poor, a reverse mortgage loan allows you to convert part of the equity in your home into cash – without having to sell your home. You can use this cash to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses. A reverse mortgage is not without risk, however. Here’s what you need to know:

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Defer Capital Gaines Using Like Kind Exchanges

Defer Capital Gains Using Like-Kind Exchanges

If you’re a savvy investor, you probably know that you must generally report as income any mutual fund distributions, whether you reinvest them or exchange shares in one fund for shares of another. In other words, you must report and pay any capital gains tax owed.

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Minimizing Capital Gains Tax on Sale of a Home

Minimizing Capital Gains Tax on Sale of a Home

If you’re looking to sell your home this year, then it may be time to take a closer look at the exclusion rules and cost basis of your home to reduce your taxable gain on the sale of a home.

The IRS home sale exclusion rule allows an exclusion of gain up to $250,000 for a single taxpayer or $500,000 for a married couple filing jointly. This exclusion can be used over and over during your lifetime (but not more frequently than every 24 months), as long as you meet certain ownership and use tests.

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