Things You Must Know About Real Estate Related Tax Planning

When it comes to real estate related taxes, there are several factors that you need to take into careful consideration. It can be a slightly complex process for the layman, not to mention time consuming as well. Thankfully, there is no need for you to take on this task on your own, and as with other legal processes, alternatives abound. To provide an example, with the help of professional legal counsel there is a property tax protest process that you can undertake if you feel you are being taxed more than you should. All in all, its complexity leads to flexibility for those in the know. Let’s discuss this matter further so as to gain a better understanding, which should enhance our decision making skills on this topic.

Capital Gains

The sales transactions related to real estate generally involves either a capital loss or a capital gain. Therefore, it is very important for you to have a clear idea about the kind of tax consequences that you may have to face before you go for port orange fl homes. In order to ensure the maximum benefits from the purchase or sale of a real estate property, you must do tax planning regarding all such transactions much in advance - click this for more. Following are some of the most basic things that you must know in this regard.

Before you start working with My Real Estate Team for related tax planning, you must first have a thorough understanding of what capital gains taxes are and how you can deal with the same. If a property that you have sold had increased in value from the point of purchase, the US tax laws require you to pay taxes on the difference between the ultimate sales price and the original purchase price. In order to save money on capital gain taxes, you will have to work on your strategies in advance and look out for ways on how this tax liability can be deferred to a future date. If you are not aware of those strategies, you may consider hiring an experienced accountant specialized in taxes related to real estate transactions.

Structured Sale Annuity

Structured sale annuity is one of the most strategies that seasoned investors often use when it comes to real estate related tax planning. This strategy can turn out to be very useful, as it can help you perform a real estate sale over time. It means you will be able to pay taxes over time instead of paying the capital gain taxes on the total sale price at one time. This strategy can eventually help you save a substantial amount of money, as you will be liable to pay the capital gain tax only on that specific part of the total sale price that you received during the tax year. For an individual who is selling a real estate property, this can be a huge tax saving. In the case of rentals, there can be disputes which  can only be resolved through legal mediation. Look for a landlord attorney, as they will be well versed in the types of laws and procedures that will apply in cases such as these.

1031 Real Estate Exchange

1031 real estate exchange is another popular strategy for that seasoned investors use to maximize financial benefits. It is often an integral part of the real estate related tax planning. Here, it is very important for you to keep in mind that the number “1031” in the term used above actually refers to a particular section of the IRC (Internal Revenue Code). You can use this strategy to avoid the capital gain taxes at the present time. You can perform a real estate sale and invest the money thus received in another real estate venture without worrying about any tax liabilities caused by it for the current year. 1031 exchange is a very common strategy that is used to defer capital gain tax dues into the future.

As you can see, saving taxes on real estate transactions can be a slightly complex process. Therefore, it might be a nice idea to hire a professional estate planning attorney to help you with real estate related tax planning.