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Those who are investing in real estate, and investors in general, consider taxes to be among their biggest expense. However, real estate investment has among the top tax breaks throughout the United States. The higher you earn, whether from your business or work, the higher your taxes are. Have you checked your pay check recently and see how much is deducted for your tax? Wages not only requires hard work but it also has a very high tax rate on top of the FICA that's also deducted and meant for your retirement. The good news is real estate has a lot of advantages compared to salaries. You can find more info online so be sure to check online sources as well.

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First is the capital gains. The tax rate for capital gains is capped at 15%, while an income wage tax is 35%. There are state taxes also which give additional discounts on an income from capital gain. Keep in mind that in order for you to qualify for a capital gains tax benefit, you have to own the property for at least a year before putting it on the market and that the property was used productively, like a rental. 

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Another aspect of real estate investment is principal residence exception. If you put your house on the market, the first $250,000 will not be given a capital gain tax and it goes up to $500,000 if you're married. But you should know that you must have lived in the house for two years from the recent five years. 

Under IRC Sec 1031, you have the option to invest what you earn from renting out your property into more properties and defer tax payment. Your tax will roll on the next property you acquire. However, the rules are quite strict since you are required to complete the exchange within six months. The exchange property also has to be recognized within 45 days from the sale of the property you've given up. When you have loaned the amount to acquire any real estate investment, you also have the right to reduce the interest when you pay the debt. 

For properties rented out, owners get a tax discount for the wearing away of the property even if its value increases. So you could actually make more money but document a loss on paper to offset your other losses. In general, whatever you earn from real estate is not subject to a FICA tax. If you plan wisely where to source your income, you might keep more money to yourself. If you need more info, you can contact a certified appraiser as well as CPA services so you can be better educated with more info about investments and taxes.

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To successfully invest and make money, check out http://www.ehow.com/how_5696336_make-money_-invest-money-rich.html. 

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