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The year is coming to an end, and it is time to begin thinking about taxes. Start preparing now, and it will be much easier when it comes time to file. It goes without saying that organization is key.
Find the Right Preparer
You may think that since you are an intelligent real estate investor, that you can do most anything. You may be right, but when it comes to real estate taxes, it helps to be prepared and educated. Right now, it is critical to learn how to structure your real estate investments.
The real estate tax laws are extremely complex, and it really does take an expert to properly complete taxes, and ensure everything is accurate. Make it a goal to keep documents organized during the year, and start now to gather all paperwork and receipts needed for April.
You should also create a file at the start of each year, then designate it specifically for tax information. This can prevent major headaches, and ultimately, prevent unnecessary financial loss come tax time.
Flipping homes can be very profitable, if you know what you are doing. Moreover, it can be a great way to increase your earnings significantly. Purchasing a home that is being auctioned at the courthouse, or that is being sold as is, in poor condition, is generally what flippers buy.
There is a lot involved in making repairs, bringing the home up to code, then listing and selling it. Yet, this is actually only a portion of the work that deserves your concentration.
Before you spend a single dime on a home to flip, or an item to repair it, designate a file box for receipts and a log sheet detailing each receipt. In addition, keep a receipt holder in your vehicle, as this will help when on the go and making purchases. It can take minutes now to complete, yet if you wait, it could take hours or even days to tether pertinent information at the last minute before tax time.
Technology is Your Friend
There are numerous software programs designed specifically for real estate investors. The applications will simply ask you to enter information in a few fields, and it will compute all tax-related calculations for you. Not to mention, apps on a smart phone are very valuable, since you can enter receipts and notes wherever you are–as the items are purchased.
Find the right app that suits your needs, and begin using it right away. Search for one that allows pictures as input. This is a big help when in a hurry–a quick click of your phone’s camera can remind you exactly what information needs to be entered later.
When possible, receive information by email, rather than having hard copies mailed to you. This will allow you to save pertinent digital documents into a file, and it can then be collected and ready for use when needed.
If you do get year-end information mailed to you, be sure to watch the mail closely, you need to have all information available when needed. If you don’t already have online access to information such as your property tax, mortgage insurance, and mortgage interest rate, set accounts up now.
When tax time comes around, it can take only minutes to print off information needed for the most savings. Keep in mind, anything you miss could end up costing you quite a bit of money.
If you are not as organized as you wish you were, consider hiring someone to maintain all your real estate investment information for you. This can be cost effective, as missing just one or two documents can cost you thousands.
There are professionals that you can contract with to work virtually, and keep, things running smoothly and well-organized for you.
Tax time is daunting for many, even though we participate in the exercise every year. This is especially true for real estate investors. So, keep organized, maintain accurate records and seek professional tax help.