投资房产, 有几种省税的办法？

投资房产, 有几种省税的办法？

There are many ways to save on tax in real estate investment. Here are what I can think about. Hope everybody could chime in for more ideas.

1. All RE related expenses are deductible against rental income and/or capital gains. These include mortgage interest, points, closing cost, legal entity setup fee, legal fee, repair, management, insurance, property tax, other carrying cost such as utilities, advertisement. Also included are reasonable expenses to carry out the business.

2. Depreciation. This include the property itself (but not the land), major improvements such as new roof. The caveat is when you sell without special consideration, you'd have to pay tax on gains and depreciation-recapture tax.

3. Upto $500K is tax-exempt for gain for primary residence.

4. 1031 exchange for investment properties. If used correctly, one can invest for a lift-time, and not pay any tax on the appreciation/capital gain. Caveat is hard to do according to the requirements.

5. Possible to use regular IRA to invest in RE, which will make the investment tax-deferred. But you have to take distribution starting at age 70. And when you start up, it's hard to get significant amount of money since you can only put in $5k each year.

6. Possible to use Roth IRA to invest, which make the investment tax-free. No distribution requirement.

7. Pass on to your heirs with stepped up basis, which wipes out all capital gain and historical depreciation. Combined with 1031 exchange, it's possible to build a multi-million-dollar RE empire and not ever pay tax on capital gains.

Among these options, truly tax-free ways of RE investment are 3: tax-exempt for homeowners, Roth IRA, and generational inheritance. I try to think about how to use these strategies to maximize the profit.

Recently I've been thinking with this audience, it's possible to utilize the generational inheritance rule. It probably won't make you rich, but it's possible to save a few bucks.

I'd like to hear what other people think/do. Please do share.

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