A commercial real estate veteran based in Florida has stated that there are two types of investors: those who invest in real estate and those who invest in real estate and get it right.
With recent increases imposed on US tax payers, investors are seeking out viable and legal means that will see their regular income tax and capital gains tax liability reduced, and there is no better time of year to re-think business plans than tax season.
Earnings and savings have been thrust into the limelight and Patrick Moorton, the president of Florida's Income Realty Advisors Inc, has offered investors insight as to the three most effective tax-saving strategies whereby investors can secure long-term wealth and maximize profits.
Firstly, purchasing a property for income purposes in a state that boasts highly favorable tax advantages, such as Florida, would be a wise move. In Florida there is no state personal income tax, no income tax imposed on limited partnerships, and also no state corporate income tax on subchapter S-Corporations.
Secondly, buyers are encouraged to familiarize themselves with tax codes. The Internal Revenue Code Section 1031 relates to the deferring of taxes through a 'Like Kind Exchange', which is the exchange or tax-deferred exchange that allows investors to preserve wealth by way of reinvestment in 'Like Kind' assets at the same time as deferring federal capital gains taxes.
Finally, those with portable IRAs could consider investing in income-producing real estate directly or through limited liability company and limited partnership interests as part of a long-term retirement plan.
With regards to purchasing investment property, Moorton said: "Net leased properties combined with tax-saving strategies are a powerful tool for creating and preserving wealth".
