It’s no secret that real estate is a tax-friendly investment.
There are not many investments that offer the tax advantages that real estate provides. Now, I’m no hater of Wall Street. I feel that diversity is important to any portfolio; but when it comes to taxes, real estate has many other investment vehicles beat.
Buying an apartment building allows your tenants to pay down your mortgage while building equity with little to no tax burden. Here are some of the tax strategies that make apartments so investor-friendly.
The beauty of depreciation is that an investor can show a loss that can dramatically lower their taxable income on their investment property. There are further depreciation that can be taken through furniture, fixtures and equipment. Standard Disclaimer -> *I am NOT an accountant, so make sure that you check with your accountant for proper declarations.
The proceeds that come from refinancing your property are also tax free. This is an exit plan that many of our clients use; reinvesting the refinanced portion into another, larger deal.
Many of our investors have used a 1031 exchange. This allows you to sell a property and reinvest the proceeds deferring all capital gains taxes. There are many specific IRA guidelines that need to be adhered to, including a narrow time window; but the investor will be able to defer their taxes for as long as they hold that investment! Make sure that you work with a 1031 specialist, as the guidelines are very specific and must be followed to a “t”.
Investing through an IRA, specifically a Self-Directed IRA, is how we were able to raise $17 Million of private money. This money is already earmarked for retirement, making it the perfect way to allow an investor to get started investing in real estate. Becoming well versed in self directed IRA’s will allow you to educate your potential investors if you’re looking to syndicate larger deals and raise private capital for your own projects.
Tax benefits are just one of the benefits of investing in apartments; economies of scale (lot of beds under one roof), burgeoning demographics, and an attractive lending climate all make investing in apartments one of the fastest ways to secure your future.
Whether you are just starting out and want to create a legacy for your family, you have done some single-family deals and want to scale your real estate business faster, or have done some deals and want to syndicate larger deals and bring in investor dollars, investing in apartments is the path to true security.
How we help investors
Elite Apartment Coaching helps beginner, intermediate and sophisticated investors actively acquire apartment buildings, creating income-producing properties. We help private investors invest in apartments and help them secure their financial future and achieve their goals.
We’ve put together a comprehensive three-day training on the fundamentals that all investors need to know to invest in apartments. The Multifamily Investor Weekend focuses on each step of the apartment investing process.
Whether you’re just starting out or have done some deals and to want get to the next level, the Multifamily Investor Weekend was designed to get your questions answered. You can get the details and register here -> http://mfiweekend.com