My mother has a 10 unit building and her variable interest rate recently dropped a point. This resulted in her paying approx. 4K a month on a 1 million mortgage and she's profiting about 6K monthly on the rents. Long story short she needs some deductions and with new tax rules its a little more dificult to make up shit. If anyone knows any tricks or grey area tactics it would be greatly appreciated. Any websites or msg boards with info would be greatly appreciated. She never made much of a profit so major deductions were never much of a concern. I have general knowledge of things like home office deductions etc but don't know the exact amounts you are allowed to claim. HELP! THANKS.
Avoiding High Tax Rates on Rental income
- Thread starter clarence
- Start date
subb'd since im trying to do the same thing as your mom
The IRS is no joke. Depends on if she's a real estate professional or not... Word of advice--don't cut corners B... Auditing rates are going up as economy has gone down. It's hard to find a good accountant but there are tons of resources online to find a good one word of mouth. Don't be cheap, consult a good tax accountant. Good luck!
I'm not a tax lawyer, really that's how you need to talk to.
However, what she can do is form corporation..prolly a C corp. Only pay herself in the form of dividends.. that way she will always be in the lowest income bracket ..around 15%
You want your ordinary income to be as low as possible. If your capital gains are $15,000,000 yet your ordinary income is $30,000 you will fall in the ordinary income bracket.
However, what she can do is form corporation..prolly a C corp. Only pay herself in the form of dividends.. that way she will always be in the lowest income bracket ..around 15%
You want your ordinary income to be as low as possible. If your capital gains are $15,000,000 yet your ordinary income is $30,000 you will fall in the ordinary income bracket.
Great advice. That is how the rich get richer. Taxes on income is horrendous. Getting paid in dividends is how you can keep most of your money.
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