Year 2018 is the year that you should consider jumping into the world of real estate. You can thank the 2017 Tax Cuts and Jobs Act, now that there is an added bonus for real estate investors.
The new tax bill allows a 20 per cent deduction on pass-through income. Real estate investment trusts (REITs) fall under that category as they function on the support of pass-through units. Austin Pickle, an investment strategy analyst says, “REITs are mandated to distribute at least 90 per cent of their income, and REITs do not pay taxes on this distributed income.”
It establishes that REITs don’t have pay taxes for most of the part. Investors get to keep the entire earnings as dividends. It’s only then that the income is taxed. In a way, the tax law is advantageous to Real Estate Investment Trust shareholders rather than the trust itself. REITs are also not taxed at a corporate rate, but the individual shareholder’s rate.
On top of that, there are several pro-real estate investing arguments that Miami-based real estate investor Gennady Barsky would like to illuminate.
Most of you already know that the government rewards rental property owners. It does not tax the cash inflow from renting your property. Landowners can mark insurance, utilities, and maintenance costs from the income. Landowners also receive deductions for depreciation, as if the property is a business asset with a life. The depreciation can be written off as a loss.
You’ll start earning your paycheck within a month of renting your property to a good tenant. There will be no losses or risks involved. Ensure that your property is renovated for maximum returns on the original selling price.
A flexible day
You can either be a full-time investor with a proper office and professional arrangements, or you can invest in real estate as a side-project. It all depends on how dedicated you are to the profession. As a real estate investor, you can choose to spend the day with your family, in addition to looking at realty opportunities online.
You’re the one who controls
Direct real estate investments are not subject to market risks, nor are they dependent on a third party organization that can possibly ruin your hard earned money. In real estate investment, it is you, who is responsible for what happens to your investments.
With ownership and accountability, you will be pushed to hustle for good deals. In the face of competition, you’ll be able to drive up certain operations to keep your investments afloat. You are in control of your own future.
According to Gennady Barsky, real estate owners look forward to inflation. Fixed-rate mortgage payments do not increase as the value of money tumbles. Instead, the cash flow increases.
If the reasons above are not enough, then note that as a real estate investor, you can leverage your capital. A $100,000 property can be paid with $30,000 cash and $70,000 loan.
Real estate investors can buy more and more mortgages with only 30% down payment. Conventional financing lets investors leverage the cash so more properties can be bought and investment opportunities can be maximized.
If you have any questions, please feel free to contact us.