I'm interested in learning more about Real Estate investing and taxes. We are getting close to amounts where our income might be too high for ROTHS (Have to check this after the standard deduction. We took the standard deduction in 2018.) But I am looking at real estate investing as a possible / future help to relieve taxes.
The 2019 standard deduction is $24k for married filing jointly, and we generally do not have enough in mortgage interest, charitable contributions, etc. to itemize, although we could work on being more strategic with those things.
If we purchase a turn key property or other real estate investement, we would be able to deduct business expenses and depreciation.
Am I missing anything? Has anyone taken up real estate investing specifically for the tax benefits? Thanks.
Do you or your spouse qualify as a real estate professional? If you are just engaging in investing but do not qualify as a real estate professional, you can only write passive losses off against the specific gains. You cannot write those passive losses off against your W2. If your AGI is too high for Roth accounts it'll be over the $150k limit for active investors. You can find a good summary here.
Note, I am not a tax professional. You should definitely talk to a tax pro who can point you in the right direction. I recently interviewed Ted Lanzaro, who advises clients around the country. Maybe reach out to him!
One of the greatest things about real estate investing is the tax benefits. There certainly are people who invest in real estate simply for tax benefits.
The number one benefit is likely depreciation which enables an investor to get cash-flow but potentially not pay any tax on it.
There are many more benefits and a forum search will allow you to find out more.