How Tax Savy Are You?
As you grow your real estate business – and, let’s not kid ourselves, it is a business and should be treated as such – you will make a lot of money. At least that’s the plan. The biggest assault against your wealth accumulation will be – you guessed it – TAXES!! In fact, for most of us, taxes are our single largest expense.
Just so you know: taxes are neither fair nor logical. This will become painfully obvious the more you deal with the Internal Revenue Service (IRS) and the Tax code. However, when you treat your real estate investing like the business that it is, tax law turns in your favor. You enjoy two distinct benefits: (1) the profit generated by your business and (2) tremendous tax savings from the opportunity to convert what were once personal expenditures into tax-deductible expenses.
How tax savvy you are has a great effect on how much money is in your pocket at the end of the year. You probably know that the tax code allows you to deduct costs of doing business from your gross income. What you are left with is your net business profit. This is the amount that gets taxed.
It’s simple: The more tax deductions your business can legitimately take, the lower its taxable profit will be. Also, in addition to putting more money into your pocket at the end of the year, the tax code provisions that govern deductions can also yield a personal benefit: a nice car to drive at a small cost, or a combination business trip and vacation. It all depends on paying careful attention to IRS rules on just what is — and isn’t — deductible.
But let’s face it. It’s not in the best interest of the IRS to fill you in on all the deductions available to you. Sure, they’re listed in the Tax Code – and you could research all 300-plus deductions if you had a mind to. But if you happen to miss a few here and there, the good old IRS is NOT going to send you a notice to let you know. It is up to you educate yourself about deductions available to you as the owner of your real estate business.
And that’s why I wrote a special report, just for you.
If you are ready to learn about strategies and deductions the IRS doesn’t want you to know, if you are sick and tired of paying more tax than the law requires, grab your copy here.
You’ll be glad you did.
Thanks for reading BillOnBusiness.net. Your comments and questions are welcomed below.
What a great idea for a report Bill! Consider me signed up!
Thanks in advance for the ideas!
Carey
Thanks Carey! I think you’ll find the report helpful – and though it was written with real estate folks in mind, those deductions will apply to all small businesses. Let me know if it raises questions about other deductions you might be able to take.
Hi Bill!
I read your free report and loved it! A lot of great tips and ideas so thank you for that.
I do have a question. I learned about this before but it’s always been confusing to me.
You know how you can claim 50% of meals? And 100% of entertainment? Well how to you determine if something is just a meal or if it’s entertainment? Because obviously, it’s in all of our best interest to find a way to consider it “entertainment.”
Thanks in advance!
Carey
Hi Carey! Excellent question – deductions for travel, meals and entertainment can be VERY confusing – even to the tax pros. That’s because these items have to be looked at in three separate categories: non-deductible, 50% deductible and 100% deductible. As a general rule meals AND entertainment are subject to the 50% rule. There are only a few exceptions where both meals and entertainment are 100% deductible. Accordingly, meals and entertainment with clients, potential clients, vendors, directors (of your corporation), partners (including a spouse or significant other if they are a part of your business) and meals and entertainment while traveling for business are subject to the 50% rule.
Hope this helps clear up some of the confusion. And let me know if you have additional questions. 🙂
Ok Bill so for the most part we’re looking at 50%…….sooo what are some examples of 100% tax deductible for entertainment purposes 🙂
Thanks!
Carey
Another good question 🙂 Here are a few 100% deductions that come to mind:
:Items such as coffee, bottled water, juice and snacks provided by an employer for employees to consume on the business premises would be 100% deductible. (Hint: If you are a home-based business, pay for such items with funds from your business checking account when doing your regular grocery shopping.)
: parties and recreational events for multiple clients such as a Christmas party or picnic
:Meals provided at a charitable event
Hope this gives you some ideas!