The Tax Benefits of Real Estate Investing in Boise, Idaho (Continued)

Earlier this month, we discussed some tax benefits of investing in real estate. We covered deductions and depreciation, and we’re continuing the conversation with capital gains and 1031 exchanges. 

Capital gains are the profits investors make when they sell their residential, commercial, or industrial property. The benefit of capital gains is the lower tax rate compared to regular income tax.

For short-term capital gains, the property has to be owned for under one year. There isn’t an advantage of short-term capital gains since tax can range from 10% to 37% as it’s based on your income. 

For long-term capital gains, you’ll need to have the property for over a year. This usually applies to rental properties, and the rates are much lower than short-term gains. With your long-term gains, you’ll have a lower tax rate, and you can take advantage of the deductions we talked about earlier. Together, it will lower your taxable amount. 

Section 1031 of the IRS allows real estate investors to sell their property to use the profits to purchase another property of equal or greater value. This means you can postpone paying taxes until you’ve sold the next property. 

Another option is a 1031 swap. This a tax benefit that permits investors to roll over paying tax while gaining from one investment to another until you sell it one year later. But this one requires you to qualify. To qualify:

If you’re ready to invest in Boise real estate and take advantage of tax benefits, contact us today! We’d be happy to start and guide you through your investing journey. Call (208) 957-0870 or email Info@BoiseTurnkey.com.