@mikeytaylor: How investors earn money that is tax free. Depreciation allows you to deduct a portion of your property's value each year, acting as a powerful tool to offset your rental income and reduce your taxable burden. By leveraging this, investors enjoy tax-efficient profits while growing their property portfolios. But there is a recapture tax! 🚨 When you sell an investment property, the IRS may want a share of the depreciation deductions you've taken over the years. This tax can be a significant surprise expense. What many RE investors do is use the 1031 Exchange. By reinvesting the proceeds from your property sale into a like-kind property, you can defer paying capital gains and recapture taxes. This strategy allows you to keep your gains invested and working for you, while building wealth over time. In summary, many real estate investors use depreciation to minimize their tax obligations and boost profits. And when it's time to sell, they employ the 1031 Exchange to avoid recapture tax and reinvest their gains. #realestate #realestateinvesting #taxfree #mikeytaylor

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Friday 14 April 2023 23:02:34 GMT