Top 5 Tax-saving investment options available for Real Estate

There is a ton of advice on the internet regarding tax-saving, but none of them is to the point and ready to take action. Here are 5 important tax-saving investment options in the United States that apply to investment in real estate.

Vamshi Vangapally
2 min readJan 20, 2023
Photo by Bailey Anselme on Unsplash

There are several tax-saving investment options available in the United States for real estate, including:

  1. Real Estate Investment Trusts (REITs): REITs are companies that own, operate, or finance income-producing real estate. They provide investors with an opportunity to invest in a diversified portfolio of properties, and they offer tax advantages such as the ability to deduct dividends received from REITs on your tax return.
  2. 1031 Exchange: This is a tax code that allows real estate investors to defer paying capital gains tax on the sale of a property, as long as the proceeds from the sale are reinvested in another “like-kind” property within a specific timeframe.
  3. Depreciation: Rental property owners can take advantage of depreciation tax deductions, which allow them to recover the cost of a property over a period of 27.5 years for residential properties and 39 years for commercial properties.
  4. Mortgage Interest Deduction: Homeowners who itemize deductions on their tax returns may be able to deduct the interest paid on a mortgage for a primary residence.
  5. Passive Activity Losses (PALs): Investors who own rental properties may be able to offset income from other sources with passive activity losses (PALs) generated by the rental property.

It’s important to note that tax laws and regulations are subject to change, so it’s best to consult with a tax professional to get the most accurate and up-to-date information.

PS: This article is for informational purposes only. Please consult your tax professional to get accurate information.