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Good Planning Reduces Investors' Tax Bite

Poor tax planning can make investing in real estate significantly less profitable. Tax, accounting, and business advisory company Grant Thornton offers these tax-season tips for real estate investors.

  • Choose the right form of business. How the real estate business is formed — S Corporation, C Corporation, partnership, limited liability company, or real estate investment trust — affects how taxes are calculated. Get expert advice.
  • Read and understand your operating agreement. The language is complex, but knowing what’s in there can save you big.
  • Are you an investor or a dealer? Pick one and plan properly.
  • Maximize depreciation. Classify costs in the right categories to get the most tax advantage out of depreciation.
  • Reward key executives. Structure it properly so they can defer the tax bite.

Source: Grant Thornton (03/13/06) via RealtorMagOnline



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