IRS BEST KEPT SECRET- THE $25,000 WRITE-OFF
Apartment investments still provides the opportunity to easily qualify as an active participant. In doing so, qualified investors can deduct up to$25,000 per year against salaries and other nonpassive income. You’ll notice that I said “qualified investors.” That’s because there are five basic conditions that must be met to qualify for this real estate write-off for investors buying apartment buildings:
It is difficult to get this deduction owning real estate other than apartment buildings. The tax codes have specially questioned whether triple-net lease arrangements found in shopping centers, office buildings, and industrial parks meet these requirements. Multi family investments fully comply because rents are generally on a gross not on a triple-net basis.
Whenever you can get the IRS to underwrite your real estate investment, you’ll be money ahead. When you apply this strategy, you’ll be working with what is known as “soft dollars.” This simply means that the IRS is paying for your real estate investment, and the “hard dollars” (your own money) ex-pended will be fewer. Never forget, however, the IRS has the divine authority to broadly interpret the real estate tax strategies but they reserve this consecrated right to draw diverse conclusions.