Tuesday , 19 September 2017
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Tax Benefits of Real Estate in Chico Ca

Tax Benefits of Real Estate in Chico Ca     There are tax incentives for both personal residences and rental properties in Chico Ca. This is one of the many advantages of investing in Chico Ca real estate as either a homeowner or a real estate investor. The tax advantages of owning real estate in Chico Ca are one aspect of investing that transcends market conditions.

Mortgage Interest Deductions advantages of Real Estate in Chico Ca  

For homeowners in Chico Ca, you can get a tax break on any interest payments you make on your home loan mortgage. You are able to claim all interest you pay on your mortgage as a tax deduction. If you pay 28 percent tax and you purchase a $700,000 home in Chico Ca with a 20 percent down payment and have a $560,000 mortgage at 5 percent, your mortgage interest deduction during your first year of home ownership will be just under $8,000 ($28,000 in interest times .28). There are limits on the amount of interest that can be deducted from your tax and an income threshold beyond which deductions are not allowed, but the vast majority of Chico Ca home owners never reach these limitations.

Tax Benefits of Real Estate in Chico Ca

For Chico Ca real estate investors who own rental property, depreciation is a significant tax benefit.Depreciation is a deduction of the cost of buildings and capital improvements to buildings over their lifetimes. You use the figures providedby the IRS which determines the useful life of various classes of buildings and improvements in order to determine the tax break for depreciation. For example if you purchase a Chico California home for rental worth $1,000,000, you can deduct $36,363 from the building’s income each year for 27.5 years. ($1,000,000 divided by 27.5 years.) It is possible via depreciation to make an actual cash profit on your rental income but show a paper loss for tax purposes. In some instances, you can carry over excess depreciation to reduce the tax liability of your employment income.

Tax Exempt Profits advantages of Real Estate in Chico Ca

As a Chico Ca homeowner you are entitled to an exemption of $250,000 (if you are single) or $500,000 (if you are married) of profit on your home when you sell it. To qualify for this exemption you must live in your house at least two of the prior five years before the sale. You are able to get this exemption once every two years.

Tax Deferment advantages of Real Estate in Chico Ca

When you sell your Chico Ca rental property, you may take advantage of IRS code No. 1031 and put the profits into a new real estate property in Chico Ca, tax free. The 1031 exchange can be used over and over, theoretically resulting in apermanent avoidance of tax on your profits. You may also do a 1031 exchange and then refinance the new building, taking your profit out as equity, tax free.

With these advantages in owning real estate in Chico Ca, why contact the best Chico Ca realtor to fully explain these beneficial benefits.

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The multiple listing data appearing on this website, or contained in reports produced therefrom, is owned and copyrighted by California Regional Multiple Listing Service, Inc. ("CRMLS") and is protected by all applicable copyright laws. Information provided is for viewer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties the viewer may be interested in purchasing. All listing data, including but not limited to square footage and lot size is believed to be accurate, but the listing Agent, listing Broker and CRMLS and its affiliates do not warrant or guarantee such accuracy. The viewer should independently verify the listed data prior to making any decisions based on such information by personal inspection and/or contacting a real estate professional.

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