Despite plummeting property values in many areas of the country and the mortgage and foreclosure disasters that have beset our nation, real estate has and will continue to be a great investment. Understanding how taxes and income tax deductions and advantages affect real estate, whether it is your primary residence or investment property is the key to making you money. In many cases it can be the key to making you totally tax free money. Here’s how this works.
On your primary home you can deduct your mortgage interest and real estate taxes which are typically county and school taxes. With investment property, you can deduct mortgage interest, real estate taxes, maintenance fees, insurance, costs of fixing up and maintaining property to lease, carrying costs of the property if it remains vacant and a host of other things to offset capital gains when you sell the property in the future.
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