step-up in basis after five years, increasing to 15% after seven years, and culminating in a complete tax exemption on the fund's capital gains after a decade. However, these benefits come with stringent requirements, such as substantial asset improvement or ground-up development, and a minimum holding period of ten years. Castelli notes the potential of these funds, stating they aim to raise the status of those communities and opportunity zones. Both the 1031 exchange and opportunity funds offer pathways for real estate investors to not only defer and diminish tax liabilities but also to contribute to community development, albeit with certain conditions and requirements.
RENTAL TAX SPECIFICS
Rental property owners are open to a variety of benefits, which I’ve listed below. You’ll notice that several are the same as for other real estate investments. Also, as with all properties, if you sell within a year of buying, you’ll be taxed at your income rate. If you hold on to a property for a year or more, as is usually the case for rental properties, you’ll deal with capital gains tax, which is a lower rate. Your overall tax deductions can depend on what type of investment business you have (sole proprietorship, partnership, or corporate entity). And, as always, do your research to make sure you’re up-to-date on all the latest tax laws, as these can, and do, change.
Rental property tax benefits:
• home office, office supplies, computer software • mileage
14
Powered by FlippingBook