Tuesday, March 3, 2009

Tip of the Day: A Tax Write Off With a "Handyman Special"

Photo by Yo Spiff on Flickr.

Another plus to investing in real estate as soon as possible.... People are saying it's impossible to sell and rent in this market. However, with all the foreclosures out there, it is definitely a smart move to buy a "handyman's special," for more than one reason. Although it is extremely difficult to flip a house in this economy, there are still investors that are buying newly constructed homes. The up side to this is that you can buy cheap, fix cheap, and sell it for well below market and still profit!! Additionally, in the event that you have to hold on to your newly renovated rental property, you are able to report a loss on your Schedule E for all improvements, taxes, insurance, and can even depreciate the property. In the worst scenario, you are able to get a major refund on all the taxes that were withdrawn from your hard earned paychecks! And if you are successful in selling, you clearly put your money into a 1030 exchange and keep playing the real estate game.... Does that sound enticing to you?

- By special guest blogger Ariel Joudai, CPA

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