Last week we discussed several ways to help you get the most out of your commercial real estate investment. Those included understanding inflation, determining your appropriate tax category, and thinking about the right loan for your investment. This week we are looking at a few more ways to help you make sure you are maximizing your investment.
WORK HARD, TRAVEL CHEAPER
If you have invested in a property that requires a significant amount of travel to get to, consider that a tax deduction. You and a spouse or partner can go to your property for a week (or any amount of time) to do any necessary repairs and you can now consider your travel expenses tax deductible. Keep in mind that IRS goes over these sorts of deductions with a fine-toothed comb so be sure to get the help of an accountant when filing these.
DRIVE THE TAXES AWAY
Similar to travel expenses, any mileage you rack up driving to and from the property, getting supplies for the property or even going to meetings with people about the property is tax deductible. The one noticeable difference is that the IRS is very liberal with what you can write off in this regard. We all know those miles can quickly add up so don’t hesitate to take advantage of the savings.
SO MANY USES, SO MUCH SAVINGS
If you use a portion of your personal items on your real estate business, you can write off a share of the expenses. Be it printer ink, your home internet, mobile phone or even setting up a portion of your home to be used as an office, you can deduct a proportional share of your expenses come tax time. This is another area that you may benefit from seeking the help of an accountant.
‘TIL DEATH DO US PART
If you hold on to the property until you die, that gets rid of the issue of capital gains and recaptured depreciation should you sell. When your heirs get the property, they also do not have to worry about these, as they are receiving the property with a practically clean slate in those regards.
If you purchased a property for $50,000 and die sixty years later, it may have appreciated to $300,000. Your heirs can then inherit the property and sell it without worrying about capital gains tax or recaptured depreciation as their basis would be the $300,000, not the initial $50,000 it was purchased for.
Commercial Real Estate is one of the more stable investment options in a well-balanced portfolio- typically offering more security than options like stocks and other wealth building investments. Diversification is the name of the game, but real estate offers a multitude of ways to increase the potential profit you can make. With a little knowhow, a great broker, a good CPA and some elbow grease, you can discover how to make commercial real estate part of your investing portfolio.