Sure… it’s that holly jolly time of year that we celebrate good times with family and friends. We look forward to ringing in a bright and cheery New Year. If you are a real estate investor, the end of the year can signal another crucial (and a hopefully positive) ending… the deadline for many real estate tax deductions! Experienced investors agree that one of the top reasons to invest in real estate is not just to generate income but also to harvest some very real and potentially significant tax benefits. Here a are just a couple of investor tips to get you ready for tax time:
Professionals pay for themselves
Whether you are an owner-occupant, a “flipper”, or possess long or short-term rentals, first and foremost, it is important that you consult with a tax advisor about your specific situation. Rules are different depending on the type of property you own. In general, don’t try to do your taxes on your own! Real estate tax law is extraordinarily complex. While you might be tempted to just “wing it” to save money, it is rarely (if ever) worth the risk. Consult with your tax professional before year’s end – and long before tax season ramps up. It will save your brain and wallet drain later.
Get ahead before the year has ended
How many of us scurry around to gather tax documents in April when it comes time to actually prepare your tax returns? Here’s a simple idea on how to make things easier on yourself… Start gathering all of your tax-related documents in one place – now! Get a large envelope, box, or bag and keep it near the place where you set down your incoming mail. Put any tax-related documents into it as soon as they start rolling in the year. If you’ve bought, sold, or refinanced during the year, the title company has given you a final closing Settlement Statement. Find this with the documents received at closing and include with everything else. Can’t find it? Simply reach out to your real estate agent. They likely maintained a copy for their own accounting records.
Give yourself a gift
Bottom line? Tax prep does not have to be a bummer! Enjoy your holidays. Be grateful for the investment opportunities you have been blessed with during the year. Take a thoughtful moment or two to set yourself up for success in 2022. Find the right organization methods and professional support before it is crunch time. Think of it as a gift to yourself!