How can you take advantage of recent tax laws for real estate regarding investment property or rental real estate in San Diego? Why should you consider this form of investment in the years to come? I recently presented in a seminar entitled “Do You Want To Learn How to Take Advantage of the New Tax Law by Investing in Real Estate?” The recent tax changes passed into law in December of 2017 provide major changes to both business and individuals with real estate. The tax reform created passive activity rules which affects a taxpayer’s ability to classify income and apply losses.
Under the new tax code most previous deductions have been completely eliminated. Taxpayers will have less opportunity to reduce the impact of taxation upon income in many circumstances. There are strategies which provide taxpayers with the opportunity to reclassify the nature of income and the tax liabilities associated with that income. For example: We now need to understand the importance of PIGs and PALs. Passive Income Generators or PIGs are fully taxed. You can take advantage of new tax laws for real estate and learn how to offset income generated from rental income (and other income sources) with Passive Activity Losses or PALs. Passive Activity Losses or PALs can be utilized to offset Passive Income Generators or PIGs within specific limitations established by the new tax code. Passive losses may be used to shelter passive income from taxation in a manner which is not available with other forms of income or investment.
Generally speaking there are tax advantages to passive income under specific strategies when compared to other forms of income. This will require the creation of a transactional plan utilizing business, real estate and tax laws to create a structure which allows one to provide extensive protections for assets including the avoidance of probate while restructuring income in a manner which substantially reduces associated taxes.
Your second home or investment real estate is an excellent opportunity to reduce the net tax rate for your income in this and all subsequent years. This may sound a bit complex. This is why it is important to draw upon the integrated business, estate planning and tax experience and expertise provided by Allen Barron. If you are interested in learning how to take advantage of recent tax laws for real estate and passive income taxation and missed the seminar we invite you to watch our “News and Events” page for future seminar opportunities and contact us or call 866-631-3470 for a free consultation.