Wednesday, June 6, 2018

Tax Benefits of Real Investing in 2018


Tax Benefits of Real Investing in 2018


Is it any wonder the Tax Cuts and Jobs Act benefits real estate investors when the president-elect made his “fortune” in real estate? Is it any wonder he passed the bill yet failed to divest his business interests as legally required to do so? No matter which side of the political fence you’re on, if you’re a real estate investor or looking to become one, Donald Trump is your presidential dream-come-true. Experts argue the bill will not benefit those it claimed to benefit, and this bears noting for moral reasons alone, but it will give the following advantages to real estate holders, so take this into account, too.

Depreciation Bonuses


Kent Clothier of the Forbes Real Estate Council reports that one of the greatest advantages of the new tax bill is its depreciation bonus. When investors buy property from 2017 forward – yes, the bonus is retroactive – they can reap the benefits of a 100-percent, five-year depreciation deduction. As long as you invest in real estate prior to 2022, and as long as you purchased the investment property and had it up and running by September 2017, you can depreciate 100 percent of your property holdings. After 2022, the break will be reduced by 20 percent each year, so take advantage of this perk now.

Corporate Tax Deductions


Controversial as it may be, wealthy business owners will see a huge decrease in their corporate tax rate thanks to Trump and his Congressional backers. What was once a 35-percent corporate tax rate is now a 21 percent one – wow. For those whose business is real estate investment, such as Peter Foyo, the champagne corks must be flying. Open up a business entity exclusively devoted to commercial real estate investing, and then enjoy reduced corporate tax rates and cuts to taxation of your pass-through income. In other words, you’ll see more profitability from your real estate investments.

Free Diversification


If you already own real estate property, Section 1031 of the Internal Revenue Code gives you a reason to pop a champagne cork, as well. In this case, Clothier reports that the new tax laws allow investors to diversify their portfolios without an “immediate tax hit.” This means you can trade real estate to reduce your loss exposure and defer any related tax obligation to the future. Any financial expert will tell you that portfolio diversification is key to your success, and with the ability to diversify without consequence, it might be time to talk with Foyo or another expert and secure additional real estate.

Other Investment Savings


To go off topic for just a moment, the new tax law also benefits those invested in long-term savings plans. If you hold an ESA, HSA, IRA, and/or 401(k) – that’s a lot of acronyms – you might enjoy a reduction in your tax obligation each year. The new law includes “immediate reductions to taxable income and decades of tax-deferred gains or tax-free investment gains,” according to Clothier, and it’s even better if you roll your high-risk investments into more secure long-term savings plans. By the way, you can also use these accounts to invest in real estate, as some plans include those holdings.

The real estate market has made a huge rebound from the 2007/2008 financial crisis, and many investors have gotten over their fear of these holdings. A diverse portfolio includes numerous financial vehicles, and real estate is once again one of them. With new tax laws written to benefit real estate investors, it makes sense to enter into this lucrative market wisely. Don’t go crazy. Nonetheless, if the president sees his four-year term to fruition, you can rest assured he’ll continue to work to benefit real estate investing. After all, it benefits him, too, so dive in while the getting is good.
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Saturday, March 31, 2018

Gold Investment During Tumultuous Times


Gold is proving its evergreen commodity status. Currently priced at $1,358 per ounce, it’s defying expectations by maintaining its price, showing consistency not found since July 2016. What’s more, gold is predicted to keep rising by Goldman Sachs, who have this week asserted that it will continue to outperform other commodities amidst fears over a market correction.

The shifting political landscape and rocky future outlook are creating problems for many markets, making securing a good investment a difficult proposition. Bucking the trend, gold is arguably profiting from global changes to its own benefit.

Trade wars and improving outlooks
The past month has been dominated by headlines concerning a trade war as hostilities ramp up between the USA and China over perceived transgressions. Typically, this would create uncertainty between the markets. Take the unexpected Brexit vote over in the UK; the result wiped $2tn off stock markets in panic. However, if you check the gold price at Money Metals Exchange it becomes apparent that gold continues to grow, never dropping under $1,000 since before 2010 and growing $5 per ounce on the back of the announcement of Trump’s China tariff. The reasons for this are varied, but Bloomberg have detailed how gold investors have out-thought hedge funds, demonstrating confidence in the commodity - despite political uncertainty.

The power of inflation
For the first time since late 2008, inflation is set to rise far above the 2% guideline in America. Reuters have explained the reasons behind rising inflation, and they shed a little light on the bullish price of gold bullion. With inflation rising, the price of the US dollar drops. In turn, gold - which is closely tied to the US dollar - becomes far more affordable, as do other related luxury markets such as tourism. If the dollar continues to fall amid inflation, gold will continue to rise in the absence of an interest rate lift.

The growth of related markets
Inflation is being driven up by increased employment, and generally speaking there is more money in the US right now. The result is growth in related markets, paired with increased global international connectivity. More people are able to purchase items more of the time, and in increased numbers. Retail consultants McKinsey have predicted a global growth in the jewellery market to $250bn by 2020, up from current sales of $148bn. This results in increased demand for gold, and particularly good quality gold as people have more income to spend. 

Gold is one of the oldest traded metals in the world, creating the foundations of many currency systems globally. Still today it creates a wonderful part of the portfolio of many canny investors.
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