7 Tax Saving Tips for Serious Real Estate Wholesalers
Serious real estate wholesalers know that taxes alone can make a double digit difference in their net returns and profits each year. So what are some of the best tax saving strategies and vehicles for investors to leverage to give less to the IRS, keep more cash at the end of the year, and speed up wealth building?
1. Self-Directed IRAs
Self-directed IRAs are one of the most powerful tax saving and investment tools available to real estate investors. They are often used by income property investors and private lenders, but are normally sorely neglected by property wholesalers. This may be out of a rush to get started and build up cash fast, but there should be no reason contributions aren’t maximized even from the first year of wholesaling houses. The compounding benefits will help those using them far outpace the performance of others while having to complete less deals for more results.
2. Maximizing Mileage Deductions
According to Ney Torres most individuals neglect as much as $6,000 in mileage deductions each year. The entrepreneur’s new Car Footprints device plugs into investor’s automobiles and does all the tracking for them.
3. Property Tax Adjustments
While real estate wholesalers may not hold onto many properties themselves thousands can be potentially saved each year just by lowering the property tax liability on their own homes. This can especially make a massive difference for homeowners in high tax areas of California and New York, and can be as simple as employing a local property tax adjuster to file a grievance with the taxing authority on their behalf.
4. Charitable Contributions
While reducing taxes may not be the best reason for contributing to charity, those with a charitable heart ought to take advantage of the breaks they are offered. There can also be significant benefits for both sides for making larger, and in-kind donations. This can include tactics such donating real estate or older cars. For some this may be the only graceful exit from upside down equity.
5. Maximize Spending During Holiday Sales
For some real estate wholesaling business owners additional tax deductions may be found in investing cash surpluses in advanced needs during holiday sales.
6. Maximizing Mortgages
One of the main reasons high net worth individuals and investors do not subscribed to the ‘free and clear’ strategy is to minimize tax liability, and maximize deductions with the mortgage interest deduction (MID) despite having plenty of cash. Where should you be using financing, or refinancing?
7. Retain an Awesome Accountant
This should go without saying but having a great CPA and tax attorney is crucial for wholesalers. A decent one will more than pay for their services and help keep investors free from legal issues.
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