Real estate riches often sound too good to be true.
There are so many obstacles along the path to that fortune meant to trip you up.
I want you to attain the ultimate profits possible, so allow me to shed some light on a rather big bump in the road designed to swallow a huge chunk of your money.
This tip will save you from a 48.8% tax massacre.
Everybody knows that the housing market suffered following the 2008 crash.
Most investors are still leery of moving in and out of large investments due to the risk of losing money.
With the uncertainty in the market right now, that’s completely understandable.
If you’re sitting on an investment property that has appreciated (gone up) in value since you bought it, you’re in better shape than most.
Actually, as a real estate investor, that’s exactly what you want.
Renting out property or using it in some form while it gains in value is the best scenario possible.
But that money isn’t liquid (apart from monthly rent payments), and there comes a time when you wonder if selling it is the right choice.
When investors feel they’ve gotten a foothold in the market and are ready to take the next step up, selling is the obvious choice.
You get an influx of cash AND the opportunity to buy a bigger or better property that will make you even more money in the future.
So goes the real estate investor’s journey.
But there are obstacles on the road to success no matter what you decide.
The system doesn’t want you to make all the money you deserve, and so it’s designed to trip you up and take out portions of your profit where it can.
Taxes are red-handed thieves when it comes to helping themselves to your money.
Between federal, state, and sometimes even local taxes, your fat stack of cash could start to look more like pocket change.
By selling an investment estate that has appreciated in value, you risk cutting out 48.8% of that profit in the greatest tax massacre known to man.
You have two options to avoid putting your hard-earned profits on the chopping block.
Both are somewhat gloomy, seeing as the ultimate tax strategy is to wait until the property can be passed on to your spouse or heir.
But, if you should choose to upgrade your investment estate prior to calling it a day, you can earn more money in the meantime.
Your first choice is to do nothing.
If you hold your property until you die, the tax basis of your gains will leave little to nothing left for your successors to pay.
But that doesn’t help YOU enjoy avoiding this taxation nightmare.
The second option is to perform a Section 1031 exchange.
It sounds daunting, and will require help from a professional, but it allows you to trade up for a better property with more future appreciation potential.
Then, you simply sit on that property for as long as possible.
That way, there are no taxes levied on the money changing hands.
So, whichever you decide to do, keep in mind that you owe your profits to yourself.
Don’t sit back and watch while the government hacks them in half.
You have too much money waiting for you in the future to give it up now.