Multifamily property investors who proactively manage their potential tax liability are more likely to earn a higher return on investment compared to those who do not.
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DALLAS, Aug. 22, 2022 (GLOBE NEWSWIRE) — Vive Funds, a best-in-class multifamily investment firm, is sharing strategic tax benefits for investing in multifamily properties instead of single-family homes as a way to accelerate the growth of the real estate portfolio. . In 2022 alone, multifamily property growth will see a record 10% increase from $213 billion to $234 billion with more than 300,000 new units built. A booming multifamily market, cultural changes, an approximately 95% occupancy rate, consistently low delinquencies and attractive tax benefits make multifamily properties a strategic and high-yield investment.
Veena Jetti, founder of Vive Funds, points out the various ways investors can benefit from this growing market. “Multifamily investments can not only generate significant passive income, but investors see strong tax benefits such as depreciation, long-term capital gains and advantageous exit strategies with their investments.”
When it comes to investing in real estate, one of the best tax deductions that investors enjoy is depreciation. Depreciation helps reduce, and sometimes even eliminate, the net taxable income produced by the property. The IRS understands that assets can wear out over time, and they grant an allowance for property depletion or wear and tear. Investors can deduct depreciation for residential property for 27.5 years and 39 years for commercial real estate.
Another aspect of this is the deduction of the depreciation allowance. Home improvement deductions were increased from 50% to 100% by the Tax Cuts and Jobs Act of 2017 and will be available in fiscal year 2022. The deductions, however, will gradually decrease until they expire in end of fiscal year 2026.
Another tax advantage of multifamily properties is long-term capital gains. Lower tax rates are a huge advantage when it comes to building wealth, and when the property is sold, the proceeds are taxed at a lower and more favorable tax rate. Long-term capital gains are 0%, 15% or 20%, depending on the household’s taxable income, instead of 30% for short-term capital gains. To reap the benefit of long-term capital gains, ownership must be held for at least one year or more, which aligns with Vive Funds’ mission to drive efficient ROI and growth for investors.
Investors also benefit from advantageous exit strategies in multifamily properties. As many investors know the old adage, “When you buy, you earn your money,” and to see more of that money, real estate exits should be planned accordingly. Fortunately, there is no shortage of efficient real estate exit strategies. For example, the most common is the 1031 exchange, which allows investors to defer paying capital gains tax as long as they reinvest the proceeds in a similar property of equal or greater value.
Jetti continued, “For today’s investor, multifamily properties offer passive income, diversification, scale and maximum tax efficiency, making them a smart and strategic long-term addition to an investment portfolio.”
Vive Funds is a multifamily real estate investment company that offers investors the opportunity to diversify their portfolios and generate strong returns by investing in properties in key markets. To learn more about the tax advantages of multifamily properties, visit https://vivefunds.com.
About Vive Funds
Vive Funds was launched to fulfill our mission of carefully curating high quality real estate investments. Our innovative strategy and detailed process drive our core value of investor-centric projects. Vive has developed a rich network of global business partners to make early, transformational investments in assets that have the potential to do great things.
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