Real Estate Investment
 

So I have just been to get my taxes done and really need to find some way to not pay as much. We have no children, I max out my 401k, give about $20,000 a year to charity, have morgage interest and that is about it.

So I got talking to the guy who did our taxes and he suggested getting into real estate, buying and renting as you can deduct tonnes of things like depreciation, fixing it, advertising it etc. etc. So I am looking into that at the moment.

So my question, has anyone else done this? What were your experiences?

Re: Real Estate Investment
 

yes, we bought a house, and rent it. we bought it for a retirement investment. it really helps with lowering our taxes. all things to be taken off include prop taxes, insurance, HOA, advertising, cleaning fees, management fees, interest on loan, carpet cleaning, fixing up, utilities - what ever you have to pay to maintain. also there is depreciation on the house.

one thing to remember, renting houses is for the long-term, not short-term. the depreciation is mandatory, and you have to pay some of it back if you don't own in through the whole depreciation course. also, renting is not for the faint of heart!

Re: Real Estate Investment
 

When you depreciate the property, you reduce the base cost, and increase the profit when you sell. It is geared to sheltering income, not building a nest egg.

A fine point, depreciation is not mandatory, but when you sell, your base cost is reduced by the depreciation allowed or allowable.

Re: Real Estate Investment
 

I don't know where you're thinking of buying, but because of the huge run up in prices over the last few years in many - but not all - parts of the US it's very difficult to be even cash flow neutral on an after-tax basis at the moment. So essentially you're relying on some level of appreciation just to break even, and, obviously, a higher level to come out ahead in the long run.

Re: Real Estate Investment
 

Depends where you get the gaff, where property tax will sting you most, and all that joy of capital gains and the like if you flog it etc.

Good place to invest though, bay area in Maine, around Camden and Rockland, there's loads of log cabins in the mountains that MBNA off loaded before getting snagged by BoA, and the execs then all flogged them, because of that, there quite cheap and a good investment if you keep them furnished for the tourists, water and mountains, it's a bit tourist spot in the summer, dead during the winter as the skiing really isn't that good, it being national parks and geared to the hiking crowd....property tax is a bit high in maine, so it's good as a rental rather than having to live there...and I believe if you rent, you can claim some of it back as tax, so pass that tid bit on :)

Can claim $3K of your annual rent back in Mass state taxes, it's shite, but it's better than nothing.

Re: Real Estate Investment
 

buying real estate purely for a tax deduction is pretty retarded IMO

if you buy a decent cash flow property you should be increasing your adjusted gross income, not reducing it. Therefore resulting in an increase in how much tax you pay.

Buying as a long-term investment on the other hand is an excellent idea. Just do your due dilligence first :)

Re: Real Estate Investment
 

yeah, it's complicated. Depreciation is not optional on a rental property. You should claim the full amount you're entitled to claim, since it is subject to recapture whether or not you claim it.