YOUR TAX-SAVING STRATEGIES DON’T END WITH THE CALENDAR YEAR.
Deferring Taxes on Sold Real Estate
Using Retirement Contributions to Reduce Taxes Today and Save More for Tomorrow.
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#4
If you are in the process of a 1031 exchange, it is fine to have the exchange straddle 2 years if all of the required deadlines are met. If you realized large gains from a property sale last year and didn’t do a 1031 exchange, investing in an Opportunity Zone Fund could be a savvy move. You have 180 days from the sale date to reinvest the proceeds into an Opportunity Zone fund to defer capital gains taxes. Unlike the 1031 exchange, the opportunity zone investment strategy does not require you to put the money into an intermediary. In cases where the asset was sold by a partnership or LLC filing as a partnership, you might have until June 2024 to reinvest and still defer the 2023 capital gains taxes.
Contributing to a retirement account can serve dual purposes: securing your financial future and reducing your current tax liability. For those with active real estate income like real estate commissions or property management fee income, a solo 401k or a similar plan can be a smart choice. These types of plans offer high contribution limits beyond the usual $6,500 IRA maximum. In fact, the IRS actually allows up to $66,000 in contributions for those with the right type and amount of income. You have until you file your 2023 taxes to contribute to some of these accounts.
CONCLUSION Remember that your tax-saving strategies don't end with the calendar year. You can control how much tax you pay. These five steps are crucial in maintaining a healthy financial strategy for your real estate investments. Make sure you are taking advantage of what is available to you!
AMANDA HAN, CPA Managing Director Keystone CPA
Amanda received her accounting degree from UNLV. As a CPA and real estate investor, Amanda has helped countless investors across the nation to super charge their wealth building through proactive tax saving with her top selling Amazon books as well as her teachings on prominent publications such as Money Magazine, Google Talks, and CNBC. Amanda brings over two decades of tax planning and compliance experience from working in Big 4 Public Accounting as well as public and private companies. In her spare time, Amanda enjoys canvas painting, biking by the beach, and seeking out the best hole-in-the-wall dining options wherever she visits.
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