Basic U.S.A. Real Estate Taxation

As the old saying goes, the only two certainties in life are death and taxes. Naturally, where there is money to be made, there are taxes involved, and the government is never going to miss the opportunity to tax profit. This is why companies, such as West Rock, recommend that any real estate investments be well planned before they are entered into. After all, when you get involved with any real estate transaction it is of the utmost important that you understand the local taxes.

The Types of Taxes

There are a few key taxes that anyone looking a real estate must consider. These taxes include income tax, capital gains tax, estate/gift tax and branch tax.1 The last one, branch tax, is only applicable to foreign corporations investing in the U.S., but the others are something to keep in mind for any investor. Naturally, the key to any real estate investment is to “find properties with a superior potential to make a return at a currently-discounted value and apply versatile credit strategies to unlock its value.”2 To do this properly, you must first understand each of these taxes.

Of course, there is more involved in the U.S. tax system than just those taxes directly related to real estate. In general, the United States has a very complex tax system, so the taxes that you need to be aware of can vary based on your investment goals. For example, if you are looking to buy and “flip” houses, you need to be aware of capital gains taxes.3 More importantly, you must always stay on top of new developments, as the tax system has been known to change from year to year.

Mind the Details

Investment companies such as West-Rock stress the importance of minding the details in your real estate investments. This is especially true in the United States, where the tax code is constantly being modified. Some individuals might research a property and think everything is perfect only to leave out the potential tax burden. It is essential that you do not fall into this same trap.

So, whether you seek the help of a company such as West rock or simply go about it on your own, always keep the local taxes in mind when looking to invest in real estate in the United States. Take this into consideration when evaluating an investment, and make sure that your information is up to date. Unanticipated taxes can mean a big difference in whether or not your investment becomes profitable.

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