Real Estate Tax Secrets To Take Advantage Of

Sometimes it seems as though the rich are always getting richer, and this may be because the rich take advantage of the real estate tax strategies that many homeowners aren't even aware of.  So can the ordinary homeowner mortals take advantage of them?  What even are they?  Keep reading to learn more and click here to find the full article.

For starters, most of these strategies involve investment properties—in other words, not your primary residence. So if you have a cabin in the woods or a beach house that sits empty most of the year, you might be in luck. Read on to follow in the well-heeled footsteps of the wealthy and maximize your tax savings this year.Strategy No. 1: Take advantage of ‘safe harbors’Smart investors don’t let second homes lie vacant, but rent them out, says Crystal Stranger, president of 1st Tax and author of “The Small Business Tax Guide.”Not only will you make extra cash, you can deduct expenses such as repairs, insurance, real estate taxes and mortgage interest, says broker and attorney Bruce Ailion of RE/MAX Town and Country Commercial in Atlanta, GA.Even better, the IRS has what’s known as a “safe harbor” rule for rental property expenses that, after Jan. 1, 2016, was expanded from $500 to $2,500. Here’s what that means for you: Let’s say the cost to replace the roof on a rental property is $4,500. Ordinarily, this would be a capital expense you’d have to deduct over the life of the roof (so, $180 per year for 25 years). But if you break the cost of the roof into two smaller bills (let’s just say $2,400 for materials and $2,100 in labor), since they’re both under $2,500, the IRS allows you to deduct these expenses all in their first year, in their entirety—and added together! So that ends up being a massive first-year deduction of $4,500.One red flag: If you personally use the property for more than 14 days during the year, your tax implications can change, so check with your accountant to make sure you’re in the clear.