Top 20 Tax Incentives for Real Estate Investors

[Julio Gonzalez]

Maximizing your available tax incentives is a big part of profitable real estate investing. Real Estate investors have a lot of options when it comes to tax incentives and tax strategies. Here are the top 20 that my clients utilize.

1. 1031 Exchange and 721 Exchange - To help preserve wealth
2. Opportunity Zone Fund - Allows you to defer, eliminate or reduce gains
3. Tax Structure - To increase tax efficiencies
4. Bifurcated Depreciation - To help maximize investor tax efficiencies
5. UpReit - A cashout strategy
6. Acquiring Losses in Existing Real Estate Fund - Buying tax write-off for your investments
7. Solar Tax Credits - Tax deduction for up to 26% of the cost of a solar energy system
8. New Market Tax Credits - Tax credits for investing in qualified equity investments in designated Community Development Entities (CDEs)
9. Design Tax Credits - Maximize architects and developers tax efficiencies
10. Energy Efficient Tax Credits - Properties that qualify as energy efficient could receive a tax credit of $2,000 per unit or dwelling
11. Charitable Contributions - Tax deduction of up to 60% of your Adjusted Gross Income
12. Brownfields Grant - Tax credit for the cost of eligible cleanup expenses in the year they are incurred.
13. Historic Tax Credits - Rehabilitation tax credit for up to 20% of the cost of the rehab
14. TIFS - Receive a refund for helping finance a development in a specific area
15. Dispositions - Dispose of the abandoned or retired assets therefore reducing taxable income
16. Cell Tower Income - Negotiate in your contract for the carriers to pay the real estate taxes on the cell tower
17. Loss Development Rights - Conservation easement resulting in a deduction of up to 50% of AGI
18. Air Rights - Is considered a like-kind property thus the purchase or sale is considered a like-kind exchange for tax purposes
19. Property Tax Abatement - Reduce property taxes on new construction, major property improvements or rehabilitation of property
20. Facade Easements - A conservation easement to preserve the character of a historic building and is treated as a charitable contribution

What tax incentives/strategies do you or your company utilize?