YOU BUY COMMERCIAL REAL ESTATE FOR INCOME TAX BENEFITS…

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PART I…

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Time after time, I have written and said that what we do in our business is to work with our clients to help them define their goals, needs, wants, and desires. Then, we help them assemble a real estate investment portfolio that will give them cash flow, appreciation, and some wonderful INCOME TAX BENEFITS to support themselves and their families for future generations.? The interesting thing about all this is that our clients love that they get cash flow and appreciation, but they want the income tax benefits!!!

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There are a number of different ways that investing in commercial real estate can give you income tax benefits, and some of those ways defer the income taxes on the gains or appreciation for years and years and even more years.?

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Another way that investing in commercial real estate will benefit you is to either totally or partially eliminate income taxes on the gains. Mainly, we will discuss the deferral of income taxes. Still, you have to realize that the Internal Revenue Code was written to collect income taxes so that the government can operate on a day-to-day basis, and they need money every day.? So, they will not give you too many ways to eliminate the income taxes on any transaction.

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While there are some highly intricate ways that people, attorneys, and certified public accountants have devised to 'eliminate' paying income taxes on certain transactions, they are so complex and costly that they are not worth pursuing. These schemes, which I won't delve into, are often targeted by the Internal Revenue Service, the Government, and the Courts, and they usually emerge victorious.

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I will tell you that the IRS targets these TAX SHELTERS and will send out bills to the partners about 2 or 3 months before the statute of limitations runs out, and these bills are for the income taxes that the partners have not paid.? These bills are HUGE because they include the income taxes, and they also include penalties and interest for years and years and years!!!? So, the taxpayer either has to pay that bill in a timely manner or sign an extension to the statute of limitations for a long time, giving the IRS all the time it wants to delve into the scheme and collect all the money that is owed to them.? Then, you must hire a team of attorneys to defend you, which costs even more money.

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Given the complexities and risks associated with certain tax schemes, we will not be discussing these TAX SHELTERS. Instead, we will focus on the 'normal' ways that we can either defer or eliminate income taxes through investing in commercial real estate. Join me as we explore the legitimate strategies that the Internal Revenue Service, or Congress, has provided to give us an edge.