Real Estate Investments the Government Will Pay You to Make

If you’re interested in real estate investment, you may have heard of the book The Win-Win Strategy: 7 Investments the Government Will Pay You to Make by Tom Wheelwright. If you haven’t already read it, no worries because this article distills some of the concepts so you can make the most out of your investments and take advantage of government incentives. 

Work With the Government to Grow Your Wealth

One of the best ways to make more money is to pay less in taxes. Real estate investors need to understand the tax code to understand the incentives the government is giving investors based on voters’ priorities. It’s not about politics but about working with the government to match its priorities and pay as little as possible in taxes. As an investor, your focus should be on policies and how they can become opportunities regardless of your political leanings.

Real Estate Syndications for Tax Benefits

Real estate syndications have become increasingly popular in recent years. They offer investors several tax benefits that are unavailable when investing in other types of real estate. One of the biggest tax benefits of investing in real estate through syndication is that you can write off your losses. If the property you invest in experiences negative cash flow, you can write off those losses on your taxes. This can be a big help if you are trying to reduce your taxable income.

Another big benefit of investing in real estate through syndication is that you can defer your capital gains taxes. When you sell a property that you have owned for more than one year, you will normally have to pay taxes on your profits. However, if you invest in a real estate syndication, the profits from the sale of the property will be deferred until you actually receive them. This can be a huge advantage if you plan to sell the property within a few years of buying it.

Finally, another great benefit of investing in real estate through syndication is taking advantage of depreciation deductions. When you purchase a property, you can deduct the depreciation that the property experiences each year from your taxable income. This can be a significant deduction, especially if the property is used for rental purposes.

Real Estate Investment to Handle Debt

A good way to think of debt funds is to think of them as the bonds of the real estate world, whereas buying property is akin to purchasing stocks. The comparison holds, but it is also worth noting that debt funds won’t be as predictable as government bonds. The government actually incentivizes the use of debt. The more debt is used, the better your returns and tax benefits. The government would like to see debt reduced, so it is in everyone’s interest to leverage debt with real estate investment. 

International Real Estate Investment

We know we have an international audience and want to encourage you to do your homework and understand your country's or even local jurisdiction’s tax codes. In the book, Wheelwright provides an overview of tax codes from various countries, including those in Latin America, Europe, the United States, and Asia. As a general rule, investing in real estate provides an opportunity to reduce your tax burden. No matter the politics, there are provisions in tax codes that incentivize investment in specific areas. Taxes are how governments can wield power, so no matter where in the world you want to invest in property, there are incentives to guide how, when, and where you invest.

Business Investment

The government is incentivizing business development. The cost of starting a business is less than the tax benefits you get when you start the business. If the business costs $5,000 to start, you’ll get even more tax benefits. Of course, you’ll need to have a steady income, but beginning a real estate investment business can be a game changer. There are low barriers to entry if you want to start a business, and it doesn’t even have to be a full-time job. As a business owner, you’ll be able to deduct basic costs from your daily operations! 

Real Estate Investment as a Home-Based Business

Once you establish your business and begin investing in real estate, you’ll get even more tax benefits. In real estate, depreciation means you get additional tax deductions even though your asset is going up in value! We know it sounds crazy, but it’s the only investment where this is the case. Everything else (oil and gas, solar) have to go up in value for you to get credit, but depreciation with real estate is a major tool in your tax arsenal. Tax money in your pocket is untaxable and can be used to invest in even more real estate. 

Why Does the Government Provide So Many Tax Benefits?

Honestly, it’s the way the tax code is written. The government wants certain outcomes, and the wealthy in most countries are the people actually investing in infrastructure, energy, business, and real estate. Spending money on development is a win-win for everyone, which is why the government is willing to give such generous tax breaks and benefits when you invest.  

Get the government to pay YOU when you start your real estate syndication business now! We’re here to help you get started by guiding you and helping you to identify the incentives that can match your business goals. 

*Please check with your tax or legal professional, as PLG does not provide tax advice and the above is not intended to or should be construed as such advice. Your specific circumstances may, and likely will, vary.

This blog post is intended to provide general information and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship with Premier Law Group.