Tax Season Is Coming—Let’s Keep More of Your Money!

Real Estate Investment

Let’s be real-no one enjoys tax season. Watching a big chunk of your hard-earned money disappear? Painful. But what if I told you real estate investing could help you legally pay less in taxes and build long-term wealth at the same time?

Yep, smart real estate investors know how to use tax benefits to their advantage, and you can too. Whether you own a rental property, are thinking about investing, or already have a growing portfolio, understanding these tax perks could mean more money in your pocket and less going to Uncle Sam. Be sure to always consult with your CPA before making any financial decisions. This information is for educational purposes only.

So grab a coffee (or a glass of wine 🍷-no judgment), and let’s break down four major tax benefits of real estate investing that could change your financial future.

1. Tax Deductions – AKA, Write-Off Heaven

When you own investment properties, a ton of expenses can be deducted from your taxable income, meaning you pay less in taxes.

Think about it: If you had to spend money on these things anyway, why not get a tax break for it?

What kind of things, you may wonder? Well, here are some examples:

• • Mortgage interest

  • Property taxes

  • Insurance

  • Maintenance & repairs

  • Property management fees

  • Legal & accounting costs and more!

Not too bad, right? Let’s continue reading (sipping too 😀 )

2. Depreciation – A Hidden Superpower for Investors 

Real estate naturally loses value over time (at least on paper). The IRS lets you deduct that “loss” every year through depreciation. Even if your property is increasing in value.

📌 Residential properties depreciate over 27.5 years
📌 Commercial properties depreciate over 39 years

Let’s say you own a $500,000 rental property (not including land). Divide that by 27.5 years, and boom- $ 18,181 in annual deductions you can take, lowering your taxable income. That’s free tax savings for simply owning property!

3. Capital Gains Tax – Play It Smart When You Sell 

Selling real estate at a profit? Congrats! But before you celebrate, let’s talk about capital gains tax.

• Short-term capital gains (owning for less than a year) = higher taxes (treated like regular income).
• Long-term capital gains (owning for a year or more) = lower taxes (0%, 15%, or 20% tax rate).

Capital Gain vs Capital Gain Taxes

👉 Pro tip: Hold onto your property at least a year before selling. It could save you thousands in taxes!

4. The 1031 Exchange – The Ultimate Tax Hack

Want to sell a property but avoid paying capital gains taxes? The 1031 exchange lets you reinvest your profits into another property (of equal or greater value) and defer those taxes.

1031 Exchange

Translation: Keep upgrading your real estate portfolio without getting taxed on every sale. Use it enough times, and you could keep rolling your wealth forward tax-free for decades.

If you want to learn how to maximize these tax benefits for yourself, let’s talk! I’d love to help you strategize and find the best real estate investment opportunities. I’m based in Manhattan Beach, CA part of the beautiful South Bay.

📩 DM me or call me today-let’s make sure your money is working for YOU!