An investment property has its own advantages than other real estate properties. But when it comes to selling, investment property requires a large tax bill and you need to pay off the taxes before closing on the deal.
Investment properties like rental are the high sources of income for many investors. With right tenants, you can get cash flow throughout the year and it is one of the most profitable way of real estate investments. But unlike selling normal houses and vacant land, investment properties can cost you more tax bills in the form of capital gain taxes.
How to reduce the tax loss efficiently?
Every year the tax rate increases by higher percentage, so the investors search for more effective methods to avoid it. For example if you are gaining a $100000, you need to pay $15000 as the capital gain tax which can incur you a loss. So to avoid such instances, you can show that you have lost some money in other investment methods to the government. Generally this method is used by the people who invest in stocks, but now the investment property investors too started using these methods to get back their tax money. The internal revenue service allows the investor to follow this method and save their taxes.
Tax code section 1031
The tax code 1031 saves many investors who do not want to lose their profit as tax. This tax code lets the investor to put up their Vancouver investment properties for sale and get back their taxes. What exactly is this? If you are selling your investment properties like rentals, you can get their profits and reinvest them in some other real estate investments. By this you can save the tax and also get the new property.
But it has some disadvantages too! You have to buy the property with the reinvestment money within 45 days of investment property sale. Within 6 months the entire transaction should be completed. Some sellers feel that this timeline is very hectic and the property cannot be purchased in a hurry. There are chances that the buyers may get cheated by the fraudsters.
The sale of investment property and acquisition of another with that amount can be a long and tedious process which requires lot of paper work and time.
Simple hack to turn the investment property into personal one!
Consider that your Vancouver investment properties for sale is a rental; you are selling it and need to pay the tax amount. You cannot implement the tax code 1031 because you don’t like to buy another property and just want to end this business. At such scenario, you can change the rental property into your primary residence and after that you can unload it easily. Selling the residential real estate property is a lot easier job than selling the investment property.
For more hot deals on investment properties and to sell them easily, logon to wholesaledealslist.com now! You can even post your property for sale in just few seconds and get attractive deals quickly!