How wise property investment can lead to tax-free cash
October 04, 2011
According to Investor's Business Daily, making smart investments in rental property can result in cash flow and tax breaks, thanks to the magic of MAGI - modified adjusted gross income.
Investors can deduct as much as $25,000 of depreciation
losses from rental property with MAGI of up to $100,000 - a figure that's reduced as the MAGI total approaches $150,000.
Any rental property losses that can't immediately be deducted are suspended, and when the property is disposed of, the landlord can deduct the losses from his or her other income from that year.
"To qualify, you must dispose of your entire interest in the property to an unrelated party in a taxable transaction," Mark Nash, a Dallas-based partner in PricewaterhouseCoopers' private company services practice, explained to the news source.
Some of the resultant money can go straight into the landlord's pocket without being taxed.
Earlier this year, the Miami Herald reported that depreciation in property values had slowed in southern Florida - a welcome respite following a three-year free-fall. Property tax rates were set last month, and local homeowners will be receiving official bills in November.