When getting started in Real Estate 5 years ago, I was living off $850 per paycheck bi-weekly. And for a few years, I didnâ€™t receive these big fat checks that all those real estate books and seminars were talking about. I was doing all the tedious work myself to save money. One day after work, a letter from the IRS welcomed me with a $6,500 check!
Yes, since we are out there taking risks and making efforts to improve the quality of housing, we deserve to be compensated by many tax write-offs. So what final adjustments can we make in December? It depends on your projected revenue next year:
If Your Revenue Is Expected To Rise:
Increase your profit this year. Reduce expense and increase revenue NOW. You will need the write- offs more NEXT Year. Postpone bills or major purchases til January if possible.
If Your Revenue Is Expected To Drop:
Reduce your profit this year. Increase expense and reduce revenue NOW. You will need the write-offs more THIS year. Upgrade equipment and pre-pay bills before January if possible. (How about that GPS that helps driving between all those properties?)
Also, watch your income and tax bracket. If you are married and have taxable income of $193,450. The first $188,450 will be taxed at 28%. The last $5,000 will be taxed at 33%. That’s a $1,650 tax bill! See 2006 Federal Tax Rate Schedules for reference. (And, yes! I was shocked! Enough tax bills!) Of course, please consult with your CPA for tax advice first. Happy New Year and Merry Christmas!
Jean Miller is the president of http://www.MotivatedLeads.com who specializes in full service direct mail marketing for real estate investors, nationwide. She writes short and practical real estate tips weekly to her 1200 newsletters subscribers. To sign up for free, visit MotivatedLeads.com