Do you know how the property moguls just keep getting richer and richer?
If you said it’s because they have a lot of money and it takes money to make money, you’d be partially right…
But they’re also using loopholes to force the government to stack their property wealth sky-high… and you can do the exact same thing!
Here’s how:
The name of the game is tax credits and deductions…
These tax credits and deductions are what the government pays you, but they aren’t exactly obvious to the common investor like you and me.
Real estate wealth feels like it belongs to an elite group of experts. It’s set up this way so that your average Joe doesn’t see how easy it is to make a MASSIVE fortune from just a handful of real estate deals.
Anybody can jump into real estate investing at any time, and it rarely takes any of your own money to get started—that’s what the banks are for.
But to expose how profitable real estate investing can be, here are a few of the tax incentives involved:
Government Funding #1: Investment Credit
This credit is something every investor should take advantage of. As long as you’re planning on owning the property for longer than a year (which most people do), the government is willing to pay out a 15% tax credit.
The investors who benefit most from this tax credit are those who make capital gains of less than $74,900 per year.
Without this tax break, the taxes you would have to pay on any taxable income below $74,900 would be 15%. The government has to pay you back all your taxes on capital gains from property up to that amount.
For example, if you made $60,000 off selling a single property, and your neighbor made $60,000 from his home business, this tax credit would ensure that you keep every penny of that $60,000, while your neighbor would only receive two-thirds of his income after income tax and self-employment tax.
The advantage of this property tax credit allows you to build your investment portfolio on the government’s dime.
Government Funding #2: Rehabilitation Credit
By claiming this credit, the government pays you to rehabilitate a residential or non-residential property.
This is a fancy term for renovation, although it doesn’t have to be a complete rebuild for you to be eligible for this credit that could be worth up to 20% of your total investment.
To be eligible for this credit, you must invest at least $5,000 into your property within two years. This would be considered a standard amount for what you’d pay to renovate a property anyway—why not get paid to do it?
What makes this credit even more interesting is that if the building is in a disaster area, such as those impacted by hurricanes and other weather-related damages, your tax credit could increase up to 26%.
A lot of people miss out on this simple tax loophole because they’re uninformed, and the government gets away with keeping the taxpayers money.
Government Funding #3: Residential Energy Credit
Keeping up with the latest environmental trend will not only make you feel good for doing your part in saving the earth, but it’ll also force the government to pay you a nice yearly sum.
By converting your investment properties to utilize solar energy, solar water heating, wind energy, and geothermal heat energy, you could receive a 30% tax credit.
Not only is this tax credit great for your wallet, but it’ll make your property more appealing to environmentally conscious buyers or renters who want to play their part.
This credit forces the government to pay you for making your home more efficient and desirable.
Using these tax loopholes can force the government to fund your property empire, and that should be all the incentive you need to dive in.
There’s so much money to be made from real estate profits alone. The government payouts simply become an extra source of income.
