It takes careful planning to provide for your income in retirement, and real estate investments offer fantastic tax benefits to investors. These laws exist to encourage investments in the real estate market through incentives. Missed opportunities to keep more of your income can add up over time, and knowing what you can write off the taxes on your Las Vegas, NV investment property can help guide your decisions and increase your profits over the long term. But, of course, real estate investing is a business, so you should treat it as such. In addition, each of these laws has qualifiers and complex nuances, so it is always recommended you work with a tax advisor to help.
You should begin developing methods in your daily work habits that improve your odds of building a prosperous portfolio. Organized record keeping is imperative, so you will want to develop a system that makes it easy for you to succeed. It is disheartening to consider the profits that uninformed real estate investors allow to slip through their fingers because of disorganization; you will need those receipts. Missed opportunities to keep more of your income add up over time. In addition, understanding what is not an allowable deduction can keep you from veering off the pathway to deductions.
If you would like to avoid missing out on your allowable deductions and be more prepared for meeting with a tax professional, read more about what you can write off of the taxes on your Las Vegas, NV investment property.
Passive or Non-Passive
It’s essential to consider the differences between passive and non-passive real estate investment income and how tax law treats each. You can further benefit from these tax laws if you are not a material participant in your real estate investment business. In other words, as a passive investor, you can write off the taxes on your Las Vegas, NV investment property through passive losses on your passive income.
Document the time you spend actively participating in business activities and whether you wish to be treated as a real estate professional when you file your taxes. Suppose you spend more than half of your time participating in business activities or more than 750 hours. Then, you may be considered a “qualified” real estate professional in the eyes of the IRS. Being classified as a real estate professional opens the door to even greater deductions and tax benefits, making it critical to track your hours and keep detailed records.
Write-Offs
If it has to do with your investment properties and isn’t an improvement, but a necessary part of maintaining, managing, or the expenses you may incur for operations in your portfolio, are all areas of allowable deductions for real estate investors on your Las Vegas, NV investment property.
Examples include:
- Property management fees
- Repairs and maintenance
- Mortgage interest
- Property taxes
- Insurance premiums
- Travel related to managing your properties
These common deductions can significantly reduce your taxable income if you remain consistent in documenting them.
Depreciation
One of the most considerable allowances to lower your taxes on your Las Vegas, NV investment property is through depreciation. While depreciation involves no cash flow, it allows for a deduction from the taxable income based on gradual deductions. Each real estate investment asset class falls under different timelines. The land is always in the process of appreciating, so depreciation is only for the improvements.
For example, residential rental property is depreciated over 27.5 years, while commercial property depreciates over 39 years. This long-term tax advantage is one of the main reasons real estate continues to be one of the most powerful wealth-building tools.
Pass-Through Deduction
You should also be aware that you can write off the taxes on your Las Vegas, NV investment property through the pass-through deduction, or the Section 199A Qualified Business Income (QBI) deduction. This benefit is in effect until the end of 2025 and allows for a 20 percent deduction on income from rentals on qualifying properties.
This deduction can be especially helpful for small and mid-sized investors, and working with a tax professional ensures you meet the qualifications to maximize your savings.
Capital Gains
You should also know how capital gains can affect the taxes on your Las Vegas, NV investment property. Maximizing your deductions requires understanding the difference between short and long-term capital gains and how to strategize to make the most of this benefit.
- Short-term capital gains (for properties held less than one year) are taxed at regular income tax rates.
- Long-term capital gains (for properties held longer than one year) are taxed at lower, favorable rates.
Many successful investors hold properties long enough to benefit from long-term capital gains or use strategies such as 1031 exchanges to defer taxes altogether.
Incentive Programs
You should also be aware that you can write off the taxes on your Las Vegas, NV investment property through 1031 exchanges and investing in opportunity zones.
- With a 1031 exchange, you can defer the profits on selling a property until you sell the following property. If you keep reinvesting, you can continue deferring these taxes indefinitely.
- With a qualified opportunity zone fund, you may defer until the property sells or on December 31, 2026, whichever comes first.
Both of these strategies are highly valuable tools for long-term real estate investors looking to grow wealth efficiently.
Special Loss Allowance
You should also be aware that through the special loss allowance, you can write off up to $25,000 of the taxes on passive income for your Las Vegas, NV investment property if you qualify. Income limits apply, and the benefit phases out at higher income levels, but this deduction can provide meaningful tax relief for everyday investors.
Why Work With Fast Vegas Home Buyers?
Why not work with a team of professionals experienced in real estate investments that stay up-to-date on how current tax laws affect investors, like a local professional investor at Fast Vegas Home Buyers?
When you work with our professional investors at Fast Vegas Home Buyers, we will help you find the perfect property for your investment strategy so you can write off the taxes on your Las Vegas, NV investment property. Let the pros at Fast Vegas Home Buyers help you earn the highest possible returns on your investment dollar. And don’t forget to ask about our current inventory of the best properties available.
📞 Call Fast Vegas Home Buyers today at 702-745-7779 to start maximizing your deductions and building long-term wealth through smart real estate investing.