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  • Tony Jacobs

Tax Benefits for Real Estate Investing

1. Tax Deductions: Real estate investors can deduct expenses related to the ownership and management of their rental properties, such as mortgage interest, insurance premiums, property taxes, repairs, and depreciation.

2. 1031 Exchange: A 1031 exchange allows investors to defer capital gains taxes when they exchange one investment property for another of equal or greater value.

3. Capital Gains Exclusion: If a real estate investor has owned and lived in a home for two out of the last five years before selling it, he or she may be eligible for a capital gains exclusion up to $250,000 ($500,000 if married filing jointly).

4. Tax Credits: Real estate investors may be eligible for tax credits when they invest in energy-efficient improvements or low-income housing projects.

5. Mortgage Interest Deduction: Investors who own rental properties may be able to deduct the interest paid on their mortgages from their taxable income.

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