The IRS wants to get its hands on your real estate investing profits, so what are you doing to protect your nest egg?
The government now wants to hit higher income earners making more than $250k a year with more taxes, including tapping capital gains. If you’re in real estate investing that is no doubt going to include you.
So what should investors be doing to keep the IRS’ hands out of their pockets?
Note: Having to pay taxes is a lousy excuse not to invest in real estate. Isn’t it a lot better to make an extra $250k or more a year and pay some taxes on it than not make that extra dough?
However, if you are just getting started in real estate investing it an be wise to clear up any issues you may currently have with the IRS. For a start, Federal tax liens can prevent you from getting mortgage financing. Secondly, if you haven’t filed in years and the IRS has been hunting for you there is a good chance they are going to want to pay you a visit if you start dumping tens of thousands of dollars in your bank accounts. The government is desperate for cash right now and the IRS has been making it easier for individuals to negotiate deals and back taxes, so if you are behind now is a great time to clear it up, especially before you start banking big.
There are lots of ways to hide your cash and income from real estate investing but before investing in a series of offshore shelter corps and open ended tickets to the Caymans remember the difference between tax avoidance & evasion.
Don’t be afraid to question your CPA to make sure not landing you on the hot list either. They might think they are doing you a big favor but you are probably better off without the extra heat. There is plenty of money to be made and if you need to duck some taxes look into your IRA options.
