Build Wealth With Real Estate

Building wealth with real estate while minimizing or deferring capital gains taxes often involves using tax-advantaged strategies and structures. Here are a few methods to consider:

1. 1031 Exchange:

   • A 1031 exchange, aka a like-kind exchange, allows you to defer capital gains taxes when you sell an investment property and reinvest the proceeds into another similar property. The key is to follow IRS guidelines and deadlines for identifying and acquiring the replacement property. This strategy can be used repeatedly to defer taxes indefinitely.

2. Primary Residence Exclusion:

   • If you've lived in a property as your primary residence for at least two of the last five years, you may qualify for the primary residence exclusion. Under this rule, you can exclude up to $250,000 (or $500,000 for married couples filing jointly) of capital gains from the sale of your home from your taxable income. This can be a significant tax benefit for homeowners.

3. Real Estate Investment Trusts (REITs):

   • Consider investing in Real Estate Investment Trusts (REITs). These are investment vehicles that allow you to invest in a diversified portfolio of real estate assets without directly owning properties. REITs often provide regular income and have certain tax advantages, such as not paying corporate income tax if they distribute at least 90% of their taxable income to shareholders.

4. Tax Credits and Deductions:

   • Take advantage of tax credits and deductions related to real estate investments. For example, you may be eligible for deductions on mortgage interest, property taxes, and expenses related to managing your real estate properties.

5. Estate Planning:

   • Engage in estate planning to transfer your real estate holdings to heirs with minimal tax consequences. Strategies like stepped-up basis upon inheritance can help reduce capital gains tax liability for your heirs.

It's important to consult with a qualified tax professional or financial advisor to develop a personalized real estate investment strategy that aligns with your financial goals and helps you minimize or defer capital gains taxes legally and effectively. Tax laws can be complex and subject to change, so professional guidance is crucial.

CONTACT ME
Erica Tucker
ericatuckerrealestate@gmail.com
832-444-7040
Follow on IG: @ericatuckerrealtor

“For I am the LORD your God who takes hold of your right hand and says to you, Do not fear; I will help you.” Isaiah 41:13