Real estate has tax advantages over any other form of investment I know of. Not only can you deduct expenses and losses ( there are limits) you can also depreciate the property. These are huge advantages. I will touch on each of the major tax advantages below. First, taxes and Nevada.
When it comes to taxes, Nevada is an investor's dream. Nevada has:
See this page for specifics about doing business in Nevada.
Note that depreciation applies to anyone with US income. (See this IRS publication for specifics). Essentially, on rental property, you deduct 1/27.5 of the purchase price of the property each year from your taxable income. (Additionally, you can depreciate personal property used in the operating of the property (appliances for example) over a shorter period of time.) This is a HUGE advantage for real estate.
At right is an simplified example. In this example the property has a positive annual cash flow of $3,250 before taxes (1). When I deduct all expenses and depreciation ($130,000/27.3 per year) the result is a tax loss (2).
Taxes and their impact on your specific situation are important and you need to consult with a tax adviser or at least read the IRS publications to fully understand the advantages and disadvantages of depreciation.
What is the disadvantage? If you simply sell depreciated property you face depreciation recapture. Please consult appropriate subject experts on this. However, there are ways to minimize or even avoid depreciation recapture. This is what 1031 Exchanges are all about.
This is an area where you must to talk to your CPA since the rules in your state, country and even your personal tax situation will invalidate some of what I am about to say. When I owned rental property, the power saw, ladder, even the cost of my periodically traveling to inspect my properties was tax deductible. For example, I believe that if you lived in Canada and came to Las Vegas twice a year to check on your property at least a portion of the expenses would be tax deductible. Expenses, when they conform to tax code and are properly documented are deductible and this will save you a lot of money on your taxes.
Contact me if you are considering buying or selling Las Vegas real estate. You will be glad you did.
...Eric
Eric Fernwood
RE/MAX CENTRAL
8400 W. Sahara Ave
Las Vegas NV 89117
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