I have read a myriad of articles talking about the various tax benefits, but I am unclear on how they apply in the real world.
Say that you are a high earner, earning $500k per year. The top end of your income is being taxed at roughly 50%. What would be the best way to lower these taxes? Which Real Estate tax deductions apply to personal income, and which only work for income from the Real Estate itself?
Would it be smart to target areas with high property taxes, for that deduction, or to buy negative cashflowing properties in high-appreciation areas?
Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
5y
@Tyler D'Alessandro
Why would you bug negative cash flow properties? Rental properties are like running a business. You shouldn’t be entering a business to lose cash. With that being said, tax losses can be generated by depreciation. However, if you are making $500k/year, rental losses cannot offset your W2 income. You or your spouse would need to qualify for a real estate professional which is tax law driven. Speak to a CPA. Good luck.