Tax Day is fast approaching – are you ready?
When it comes to figuring your real estate investments into your taxes, there are many important factors to consider. If you are a real estate investor looking to make those investments count this year, make sure to take a look at these three tax tips before getting started.
Know your books
Have you been keeping detailed records on your investment properties this year? Having a handle on your records and expenses will mean giving yourself a relieved pat on the back come Tax Day, because you will have made the entire filing process easier on yourself by paying more attention to detail up front.
Not an organized person?
No problem; we live and we learn. This year, consider hiring a bookkeeper to keep track of your records so that you can focus your efforts on managing and growing your business. It’ll be a win-win-win for yourself, your wallet, and your sanity.
Know your deductions
Did you know that maintenance expenses are fully deductible in calculating the tax liability for a real estate investment? Things like a fresh coat of paint and other minor repairs are examples of costs that are tax deductible, although it is important to note that not all maintenance costs necessarily lead to a tax break. Improvements that prolong the life or increase the value of your real estate property are treated differently from normal maintenance costs, so when preparing for tax season, it literally does pay to know the difference between the two ahead of time.
Know your CPA
When it comes to investing in real estate, tax savings can transform a decent investment into a very good one. However, what separates new investors from seasoned ones is understanding when these tax benefits apply and when they don’t. Partnering with a CPA who understands the ins and outs of tax deductions with regard to real estate investing will help ensure a successful tax year and a real estate investor who is better prepared for the years to follow.
If you are interested in learning more about the benefits that accompany real estate investing, or if you are a current investor looking to partner with a property management company in the Knoxville area, contact Woody Creek today!