Real Estate Tax Incentives Written by Neda Dabestani-Ryba
Real Estate Tax Incentives
By Neda Dabestani-Ryba Prudential Carruthers REALTORS
Lower Your Taxes Tax incentives for real estate investors can often make difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit. For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming tenant doesn't pay them). These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation. Buildings naturally deteriorate over time, and these "losses" can be deducted regardless of actual market value of property. Because depreciation is a non-cash expense -- you are not actually spending any money -- tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of U.S. Tax Code.
Have a Positive Cash Flow There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow.
Law & Logic of Homeowner Association Capital ReservesWritten by Neda Dabestani-Ryba
Law & Logic of Homeowner Association Capital Reserves By Neda Dabestani-Ryba Prudential Carruthers REALTORS
In October 1999, Oregon was one of first states that enacted a significant improvement to its Condominium and Planned Community regarding capital reserve planning, a process by which homeowner associations plan and fund future repairs and replacements. For many associations, process became mandatory although there was an "escape clause" for pre-October 99 Oregon communities. But there's more to reserve planning than The Law. Where statute stops, Board's "fiduciary" duty kicks in. A "fiduciary" is one who is given trust or confidence of another. The Board is entrusted with care of biggest single asset that most people own, their homes. These people have right to expect homeowner association to be run like business that it is...a corporation often responsible for millions of dollars in assets. The reserve study concept was developed during 1980s as a result of many aging homeowner associations that found themselves in dire straits due to failure to plan for reserve expenses. The homeowners expected Board to plan for such events and all too many had no plan other than "dealing with it" when time came. Well, those "times" came all too soon and inevitability lived up to its reputation. Thus, obvious need for long range planning came about.