How Do Tax Deductions Work?

Tax deductions are important for individual taxpayers because they can reduce your overall taxable income, which in turn can lower your tax liability, or the amount of money you’ll owe to the Internal Revenue Service when you complete your annual tax return.

Are Distributions From a Charitable Remainder Trust Taxable?

Charitable remainder trusts offer donors several benefits. The trust takes ownership of your assets, including properties, stocks, and savings. Your CRT donates the income your assets generate to beneficiaries of your choosing.

Are Property Taxes on Vacant Land Tax Deductible?

Previous Realized blogs have dealt with the issue of real estate investments, taxes, and deductions. Specifically, if you own income-producing real estate property as an investment, you also have the ability to take various deductions and expenses on that property when it comes to tax-filing time.

Are Escrow Fees Tax Deductible for Rental Property?

Owning rental property brings to the owner various tax advantages, some of which are deductions like payments for mortgage interest, operating costs, property taxes, and repairs.

Who Can Deduct Property Taxes?

Local governments typically levy property taxes, which serve as the primary funding source for those regional entities. Proceeds from property taxes pay for police and fire services, education, maintenance and construction of buildings, and local services. In most areas, property taxes are imposed on land and buildings--both residential and commercial. For example, in most states, property taxes on residential units are calculated according to the fair market value of the housing. Still, there may also be limitations or exemptions for certain citizen groups, like veterans, the disabled, and the elderly.

Do I Have to Itemize to Deduct Property Taxes?

As a real estate investor, you may be looking to maximize income and minimize taxes. Those are desirable goals, and there are strategies you can use to help work toward them. Having expert professional financial and tax advice is a good way to ensure that you are taking advantage of all the potential opportunities available to you. One possible benefit of investing in real estate is that the deduction can sometimes lower other income in addition to the revenue from the real estate investment.

Is Real Estate Tax the Same as Property Tax?

While real estate tax and property tax may sound like the same things, there are some distinctions. At a high level, real estate taxes are a group of various types of taxes imposed on real estate. Property tax happens to be one of those types. Let’s look at the various taxes that compose real estate taxes.

Is REIT Income Taxable?

In order to qualify as a real estate investment trust, the trust has to return a minimum of 90 percent of taxable income gained from income-producing properties, asset divestiture, and other means back to shareholders in the form of annual dividends.

What Is Deferred Tax Liability?

One of the most important aspects of investing or business ownership is found in understanding the Federal Tax Code. Failure to understand that federal law could put you in a position to face hefty fines and potentially serve federal prison time. While the federal government always expects you to pay your taxes, it’s also important that you understand the legal delays that are provided within the Federal Tax Code. One such example is found in deferred tax liabilities. These legal delays provide investors and business owners with a temporary reprieve on paying federal income taxes on certain earnings.

How Do I Know If I Have Tax Liabilities?

One aspect of being an investor is operating within the framework of the law. Obviously, you want to make investments that provide a positive return on your initial investment, but how you manage those returns may be even more important. The Federal Tax Code, while it does provide some tax breaks and deferral options, is clear about one thing: when you owe the federal government taxes, they want their money. Understanding how to determine when and if you owe taxes and the consequences of not doing so is one aspect of becoming an informed investor in any industry.

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