Does owning rental property help with taxes?
In a word, yes! There are many ways to save on taxes, but owning rental property will definitely do so. Here are 3 categories where owning rental property will help.
Accelerated depreciation uses the Modified Accelerated Cost Recovery System (MACRS) method of depreciation. This allows the taxpayer to establish shorter depreciation periods for qualifying assets. In order to do so properly, this requires an engineering based cost segregation study. The IRS states, “…Cost Segregation, for it to be properly applied, had to involve those with competencies in architecture, engineering or construction and/or construction techniques, in order for personal property assets to be accurately identified and segregated.” This statement from the IRS is very clear. The accounting profession of all stripes is unqualified to apply cost segregation…no disrespect intended, but the facts are clear. As a taxpayer, it is incumbent upon you to do your own due diligence. Confirm this information yourself. Check out the IRS website for cost segregation.
This is a lengthy list, including but not limited to, operation expenses, loan interest, payroll taxes, property repairs, and on and on.
Proper Planning & Strategy
It is vitally imperative that one always seeks professional help when seeking ways to save on taxes. Tax attorneys, CPAs/accountants, Estate Planners, and those who directly work with assets affected by taxes. Those would include cost segregation professionals trained in, and fully knowledgeable of, income and property taxes, and how they impact the taxpayer.
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