This is the 4th blog in a series about changes we may expect to see in 2017 with your taxes.
There are some significant changes likely coming for your business. But what if you’re a real estate investor? What changes will you have?
In general, real estate investing is a good hedge if there is inflation. We haven’t had inflation for a while now and so a lot of people, me included, are concerned that it’s coming back. If that does occur, real estate is one of the best investments you can have. You can adjust your rents to keep pace and yet one of your biggest costs, mortgage interest, will be fixed. Right now, interest rates are low.
One of the things that Pres-Elect Trump has discussed is deregulation. That will mean credit should be easier to get. There is a downside to that as well, especially if the crazy days of unaccountable lending and borrowing practices occur. Meanwhile, though, credit has been entirely too hard to get for too long. A change would be good.
Now, let’s talk about taxes.
What changes can we expect? Most likely very little outside of the personal tax changes we’ve already discussed. Trump is a real estate investor and he understands the tax benefits real estate investors need. I think he will be a good champion for keeping those in place.
You will most likely have lower taxes and that means more cash to invest. I hope you consider investing that in real estate, in projects that provide you net cash flow every month. Make smart purchases in areas where there is positive cash flow possible and that have strong rental pools that can survive changes in the marketplace.
If you can’t take the real estate professional loophole, much like Pres-Elect Trump soon can’t, then looking for big cash flowing properties is even more important. The tax breaks that go with real estate can offset the income you make but can’t be used against your other income.
Please make sure you go back and read the other blogs that discuss the changes in itemized deductions, exemptions, standard deductions and tax rates. These will likely impact you.
We discuss real life real estate tax and accounting strategies on the first Wednesday of every month at 6 pm Pacific as part of the group coaching program. The third Wednesday is devoted to business. You can find out more information at USTaxAid.com/coaching