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Did you know that if you have investor and dealer properties in your investment portfolio, you can get tax breaks on your investment properties?
There is a significant difference in the taxes owed, so it’s important to understand the distinction and take advantage of the savings. The IRS certainly won’t offer it to you, so it’s important to be informed!
Here’s the thing: The IRS looks at each property individually, so you can have ‘dealer’ and’ investment’ properties. Dealer properties are those you buy and sell quickly, usually within one year, as are those you fix and flip.
If you buy and hold properties AND have proper documentation, you may benefit from further tax deductions because investment properties are treated like a business, especially if you receive rental income.
The key factor here is that each property has its own classification. Don’t make the mistake of lumping your entire real estate portfolio into one category. This could cause you to either pay more taxes than necessary or not enough – neither of which is a good situation.
If you need help deciphering your real estate categories, contact me today!
