Can You Assist with Tax Planning for Investments or Real Estate?
Investments, such as in real estate, can support immense financial growth, but they come with significant tax considerations. The resourceful professionals at Phoenix Tax Consultants – serving Greater Philadelphia – are well prepared to guide you through the tax planning necessary to maximize the return on your investment. This includes minimizing your tax liability, and we welcome the opportunity to help.
Investments Can Help Offset Your Tax Liability
When your investments are tax-efficient, they can help minimize the taxes generated by your returns. This makes strategizing a beneficial mix of tax-advantaged and taxable investment accounts key. The bottom line is that the less you’re taxed on your investments, the more money you’ll have to reinvest, which leads to compounded growth over time. An accomplished tax professional will help you identify your investment sweet spot.
Maximizing the Potential of Real Estate Investments
Investing in real estate has many advantages, but one of the most important is the potential for significant tax benefits. The goal is to achieve a strategic balance that minimizes tax costs and maximizes financial growth.
Bonus Depreciation
Bonus depreciation can be a timely tool for real estate investments. It represents an accelerated method of tax deduction that allows taxpayers to deduct a larger portion of the purchase price for a qualified property in the first year rather than spreading the deduction over the asset’s useful life.
Tax Deductions
Real estate depreciation is a method for deducting loss in the market value of property experienced over a year and the cost of buying and improving the property over its lifetime. The IRS allows real estate investors to deduct a specific dollar amount each year and rent out the property.
Immunity from FICA Tax
Real estate investors are immune from FICA taxes – which include Social Security and Medicare taxes – on the income their rental properties generate. FICA taxes generally amount to 15.3 percent of income but don’t apply to income earned from investments, including real estate investments.
The 1031 Exchange
A 1031 exchange refers to swapping one real estate investment property for another, allowing the investor to defer capital gains taxes until the property is sold. Factors to consider include:
- A 1031 exchange is a tax break that allows you to swap a piece of property for another piece of property that will be used for the same purpose as the original.
- The proceeds from the sale of the first property must be held in escrow by a third party – to be used to purchase the second property.
- The IRS must consider the swap a like-kind exchange.
- When applied correctly, 1031 exchanges aren’t limited to a specific number.
Call Our Established Greater Philadelphia Tax Services Firm Today
Phoenix Tax Consultants is a leading tax preparation and advisory firm in Greater Philadelphia. We offer the caliber of tax planning you need to maximize the value of your investments. Learn more by contacting us online or calling 610-933-3507 today.