The end of the year is almost here and so is the deadline for real estate investing companies and investors to act to minimize their tax liability. So what can you do to lower the amount of taxes you will owe or increase your refunds when tax time rolls around?
Of course, the following must be prefaced with the fact that you should discuss these items with your own accountant or CPA prior to taking action to assess you individual situation and how much difference they can make to you.
Donations and gifts are a great way to do something good and lower your tax burden. Old cars, furniture and even homes can be donated by those in real estate investing. However, you may also be able to pass on properties or profits you have acquired through real estate investing to your children to begin transferring wealth and minimizing the taxes on it.
If you anticipate having to pay taxes when it comes time to file you may also be able to deduct or write off expenses for your real estate investing activities including items like purchasing new cars and investing in your real estate education. So perhaps now is the time to get your hands on that real estate investing program you have had your eye on or book your ticket at an event for next year.
If you have properties you anticipate selling before the end of the year talk to an attorney or tax accountant about the benefits of a 1031 exchange. For new real estate investing you may want to set up a self directed IRA and make sure that you max out your contributions before the end of December.
Finally, make sure to organize your records and keep track of all receipts and expenditures, especially the ones for entertaining clients and networking throughout the holidays as they can be deductions too.