tudi Funds, tis, and Real Estate Back to Assignment Attempts Keep the Highest/3 8. Specifics of real estate investment - Tax liability and leveraging Making Real Estate Investments Real estate has been a lucrative investment for many years. Real estate provides greater diversification properties as compared to equity or fixed- income investments. Two important benefits to investing in real estate are the abilities to leverage investments and to decrease tax liability Consider Caroline's case: In 2018, Caroline has an adjusted gross income from one job of $35,000 (not including any deductions from real estate loss). In addition, Caroline owns an apartment building that she rents out throughout the year. The revenues she received from her apartment building amounted to $105,000 in rent payments for the year. The operating expenses (maintenance, mortgage Interest, and so forth) amounted to $63,000 for the year. search this course Assignment: Chapter 13 Investing in Mutual Funds, ETFs, and Real Estate addition, Caroline owns an apartment building that she rants out throughout the year. The revenues she received from her apartment building amounted to $105,000 in rent payments for the year. The operating expenses (maintenance, mortgage Interest, and so forth) amounted to 563,000 for the year. Har income before subtracting depreciation expenses) for the apartment building is therefore (her rental income minus her expenses) Her accountant has informed her that the apartment building can be depreciated up to $47,250 for tax purposes in 2018. Because her modified adjusted gross income (MAGI) is less than $100,000, she can subtract of the depreciation expense from her rental income and thus not pay taxes on that amount), and the remaining 5 of the depreciation be written off against her ordinary income Suppose Caroline is interested in purchasing an additional apartment building as an investment. She has $40,000 in cash and can borrow an additional $120,000 at an annual interest rate of 9% to purchase a property costing $160,000 If the property is expected to generate 517,280 per year after expenses, then the benefit from leveraging the investment the cost of paying interest on the loan. Grade It Now Save & Continue Continue without saving tudi Funds, tis, and Real Estate Back to Assignment Attempts Keep the Highest/3 8. Specifics of real estate investment - Tax liability and leveraging Making Real Estate Investments Real estate has been a lucrative investment for many years. Real estate provides greater diversification properties as compared to equity or fixed- income investments. Two important benefits to investing in real estate are the abilities to leverage investments and to decrease tax liability Consider Caroline's case: In 2018, Caroline has an adjusted gross income from one job of $35,000 (not including any deductions from real estate loss). In addition, Caroline owns an apartment building that she rents out throughout the year. The revenues she received from her apartment building amounted to $105,000 in rent payments for the year. The operating expenses (maintenance, mortgage Interest, and so forth) amounted to $63,000 for the year. search this course Assignment: Chapter 13 Investing in Mutual Funds, ETFs, and Real Estate addition, Caroline owns an apartment building that she rants out throughout the year. The revenues she received from her apartment building amounted to $105,000 in rent payments for the year. The operating expenses (maintenance, mortgage Interest, and so forth) amounted to 563,000 for the year. Har income before subtracting depreciation expenses) for the apartment building is therefore (her rental income minus her expenses) Her accountant has informed her that the apartment building can be depreciated up to $47,250 for tax purposes in 2018. Because her modified adjusted gross income (MAGI) is less than $100,000, she can subtract of the depreciation expense from her rental income and thus not pay taxes on that amount), and the remaining 5 of the depreciation be written off against her ordinary income Suppose Caroline is interested in purchasing an additional apartment building as an investment. She has $40,000 in cash and can borrow an additional $120,000 at an annual interest rate of 9% to purchase a property costing $160,000 If the property is expected to generate 517,280 per year after expenses, then the benefit from leveraging the investment the cost of paying interest on the loan. Grade It Now Save & Continue Continue without saving
