5 Tax Saving Tips For Real Estate Investors

Taxes are one of life’s many certainties, especially for real estate investors who spend millions of hard earned cash yearly on housing tax. However, paying housing or property task shouldn’t be such a painful ordeal if you can put a few of the tax saving tips in this article into practice. Hence, to maximize your task savings on your property investment make sure you have streamlined your investing operation appropriately. Below are five tax saving tips every real estate investor should know:


Hire the services of a good accountant

Having a good and competent CPA is necessary if you must maximize your tax savings as a real estate investor. Unless of course, you enjoy spending your hard earned cash, your best bet to maximizing your property tax saving is by finding a very competent CPA who is conversant with the real estate market and also specializes in real estate tax. Although there are so many unqualified CPA’s that can make a mess on your investments, finding a qualified accountant is non-negotiable if your investment must keep more money. A good CPA can help you make an informed decision as well as recommend other team players that can make your investment a profitable venture.

Get organized

Many real estate investors today pay so much in tax because they have refused to keep accurate records of business dealings. As a real estate investor who wants to maximize tax savings, you must ensure that you keep a strict record of all financial transactions. One thing that has proven very helpful in this regard is finding a filling system that works for you. To this end, you must keep an accurate record of all your real estate investment just as IRS advises.

Hold Short Term and Long Term Investments in Different Entities

Having located a qualified CPA who understand the dynamics of real estate investments, the next step you should take is separating your short term investment from your long term investment. As you would agree, flipping, rehabbing or wholesaling are essentially a short term property investment while owning a rental property is typically a long term property investment. Opting for any of this two property investment options can have an enormous impact on your property tax. Hence you must ensure you have a qualified CPA that will help you figure out which property investment strategy is perfect for you.

Figure out overlooked deductions

Overlooked deductions are one of the reasons most real estate investors are paying heavily for property tax. Nonetheless, a good, reliable and qualified CPA that is familiar with real estate investment can help you locate and cut down your overall tax bill. As such, one question every real estate investor should always ask is why paying more when you don’t have to? A perfect way to cut down overlooked deduction is to:
• Cut off home/office expenses
• Write off mileage cost from investment
• Reduce business entertainment cost
• Cut down on unnecessary travel expenses etc.

Prevent capital gains taxes

One smart way every real estate mogul can save money on taxes is to avoid capital gains taxes. For instance, if you own a property, you can sell that property without having to pay capital gains taxes. This is made possible by section 1031 which states that when you reinvest the proceeds of the sale of your property in another property, then you are exempted from paying capital gain  taxes.

How to Invest in Real Estate with little Money or Experience

Not surprisingly, investing in real estate seems possible when there is money, and perhaps a somewhat amount of knowledge about it. This is the idea most would-have-been investors and naïve persons share, and this idea has scared some of them away. Despite the fact that individuals who are experienced and are with their money seem to hit it big when it comes to investing in real estate, there is also every possibility for individuals who have little money and perhaps no or little experience to embark on property investment and become successful.


If you wish to key into property investment without having money for it, you can consider seller financing, albeit it all lies on the seller to make this workout. In this strategy, the seller may choose to give you a loan to help you purchase the property. In some scenarios, you can make a down payment to the seller and subsequent monthly payments, or make higher monthly payments without a down payment. However, it is important to have a legal backing in any of the cases.

Moreover, you can choose to offer a skill or your labor in lieu of paying for an investment property, suffice it to say that you can work out a trade. Having little or no money for investment, you may want to trade by barter, perhaps offering your skill or other possessions like cars, furniture or artwork, as well other valuables; this can serve as part or full pay for the real estate. Although naïve and broke, with your suitable skill, you can seek for a partner who is lacking your ability; this maybe a partner with financial capability and experience, while you have the skills and knowledge. It is vital to have every terms and condition clearly stated with a legal backing.

With little or no money for real estate investment, it is possible to invest in real estate by using lease option strategies.  The leasing strategy involves purchasing property, without legally owning it; rather the investor signs a long-term lease and an option to buy the property at a specified amount at the end of the said time. The investor has no legal right to resell this property until he pays off in the future, but can sell his option or rent the property.

You can also consider going for private money lenders; these are people with disposable income or money they wish to invest not necessarily in real estate. When you approach them with a solid plan, they can listen and hear you out and in the end, may lend you the money which you will use in investing in real estate. Gone are the days when potential investors avoid investing because they don’t have any or sufficient money to invest in the real estate. Lately, it is possible to invest with or without your money.