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Real Estate Education: 4 Tax Planning Tips for Investors

How can you ensure less hassle, less stress, and fewer taxes owed when tax time comes around next year? The answer lies in in proper tax planning.

While an expert tax professional should be consulted before making any moves, so many real estate investors fail to have any real tax plan. Some may be aware of a few potential tax deductions, write-offs or even turn to great CPA’s at the end of the year to file their returns. Yet, without making the effort to actually be proactive about tax planning, investors will end up forking over many thousands of extra dollars to the IRS each year.

Now imagine turning that around. Think about the compounded financial benefits of keeping hold of those funds and putting them to work for you over time. Tax smart investors can easily add double digits to their real estate investing returns.

Here are four ways to improve your tax planning, keep more of your profits, and even increase your income:

1. Paperwork

It might not seem appealing or may appear trivial, but keeping your paperwork and accounts organized year round can make a huge difference when tax time comes. Often accounting firms will charge less if yours is maintained all year versus having truckloads of receipts dropped off on April 14th. Plus it means making sure you take full advantage of all of your deductions.

2. IRAs

While direct investment in real estate carries many tax benefits by itself, no investor should be selling themselves short by forgoing the advantages offered by regular contributions to a self-directed IRA.

3. Office & Productivity

Many real estate investors limit themselves by trying to pinch pennies rather than set up offices that really engulf them in their optimal surroundings. Meanwhile, the savviest investors look for ways to build their office and create their ideal environment for doing their best work. This can both increase productivity and provide additional tax deductions.

4. Travel & Entertainment

Some may not even realize that travel and entertainment can be expensed on taxes. This could make exploring new investment destinations, making face to face meetings and doing more networking, pay for itself. Find out what you are eligible to write-off.

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