10 Year-End Tax Tips Every Real Estate Investor Must Know

Insurance Claims - 10 Year-End Tax Tips Every Real Estate Investor Must Know

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The countdown from Thanksgiving to Christmas is a magical time of year, but it's also a warning to real estate investors that December 31 - the end of the tax year - is approximately upon us. If you haven't yet gotten your financial house in order you're running out of time to fetch your records and do some last-minute planning to minimize your tax burden. The good news is, if you start now, you still have time to save yourself some money on the tax bill you're going to have to pay in April. Here are 10 great money-saving tax tips that will put a warm smile on your face regardless of the climatic characteristic outside.

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1. Home Office Deduction - If you're new to real estate investing, you may not be aware of this always in vogue treasure that the Irs makes ready to you. By setting up a dedicated workspace in your home, you can deduct much of the costs of doing firm if you work out of your home. In addition, you can proportionally write off some of your living expenses, such as mortgage interest, utilities, and telephone expenses.

2. Mileage Deduction - Sky-high gas prices will in effect save you money at tax time. You'll be able to get some of these expenses back, but the proper rate will vary, depending upon when you were driving for business. For the half of the year ending June 30, the deduction is 50.5 cents per mile. Beginning July 1 and going to the end of the year, that rate increased to 58.5 cents per mile.

3. Educational Expenses - Did you conclude you just had to pick up that investing course, book, or Cd set that claimed it would put you on Easy road in no time? Good news. It's deductible as long as your purchase was designed to progress your firm opportunities.

4. 401K Conversion - Did you ultimately conclude it was time to fly solo? If you quit your job this year, you can change that 401K plan that's getting beat up by Wall road into a self-directed Ira. Not only will it save you money, it will also free up important dollars you can use to spend in even more real estate - all with Uncle Sam's blessing.

5. Self-employed condition guarnatee - One of the biggest challenges faced by self-employed real estate investors is how to pay for condition guarnatee once you leave the relatively safe ranks of the employed. This deduction can save you a bundle because guarnatee premiums are very high.

6. Charitable Contributions - Do you love that warm, fuzzy feeling you get inside when you spread nearby some of your hard earned cash - and it's not being caught by a Washington politician? If that's the case, give to your heart's content, while enjoying a enormous Irs tax deduction.

7. 1031 change - This money-saving tip can save you tens of thousands of tax dollars over the procedure of your real estate investing career. When you sell a property for a profit you would usually get hit with a enormous capital gains tax. This technique allows you to defer your tax penalty indefinitely - until death if you like. Use the 1031 change to defer taxes you'd otherwise have to pay. While it's true that "you can't take it with you", why should you take the taxes with you?

8. Charrissa's Mortgage hidden - This technique seems devious, but it's an entirely legal way to reduce your tax liability. Your mortgage payments are probably due on the 1st of the month. By paying them a day early, not only can you save a day's interest, but you gain the benefit of being able to deduct an extra month of mortgage interest. How much can you save with this technique? How many properties do you have?

9. Charrissa's Stalling Technique - If you're planning on selling a property in December you can save your capital gains liability by delaying the closing until the new year. While not as useful as the 1031 Exchange, it still allows you to delay paying the tax for a full year.

10. Early cost allowance - Will you owe state and local taxes this year? You have two choices: Pay them in January and wait a full year to take your deduction - or pay them in December and deduct them next April.

You may be wondering what to do with some of your tax savings. That's in effect your call. You can use it for investing in an additional one red-hot property or you might put it to good use as an extra nice Christmas gift for that extra man in your life, or you might even opt to achieve a random act of kindness for man less fortunate than you. If you play your cards right, you might be able to do all three.

Whatever you decide, enjoy doing it. Smile knowing that the money you're spreading nearby is being spread by you - and not being squandered by your Uncle Sam.

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