Multifamily property investors who proactively manage their potential tax liability are more likely to realize an increased return on investment than those who do not.
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DALLAS, Aug. 22, 2022 (GLOBE NEWSWIRE) — Vive Funds, a best-in-class multifamily investment firm, shares strategic tax benefits to accelerate real estate portfolio growth by investing in multifamily properties instead of single-family homes. . In 2022 alone, multifamily property growth will see a record-breaking 10% increase from $213 billion to $234 billion, with more than 300,000 new units being built. A growing multifamily market, cultural changes, nearly 95% occupancy rates, consistently low crime, and attractive tax benefits make multifamily properties a strategic, high-return investment.
Veena Jetty, founder of Vive Fund, points out several ways investors can benefit from this booming market. “Multi-family investments alone can generate significant passive income, but investors see strong tax benefits such as depreciation, long-term capital gains, and profitable exit strategies with their investments.”
When it comes to real estate investing, one of the best tax deductions investors can enjoy is depreciation. Depreciation helps reduce and sometimes eliminate the net taxable income produced by an asset. The IRS recognizes that assets can depreciate over time, and they provide an allowance for asset exhaustion or wear and tear. Investors can deduct 27.5 years of depreciation for residential property and 39 years for commercial real estate.
Another aspect of this is the bonus depreciation deduction. Deductions for property improvements were increased from 50% to 100% by the Tax Cuts and Jobs Act of 2017 and will be available through the 2022 tax year. The deduction, however, will gradually decrease until it expires at the end of the 2026 tax year.
Another tax benefit of multi-family properties is long-term capital gains. Low 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, more favorable tax rate. Long-term capital gains are either 0%, 15% or 20%, depending on the family’s taxable income, instead of 30% for short-term capital gains. To take advantage of long-term capital gains, assets must be held for at least one year or more, which aligns with Vive Funds’ mission to deliver efficient ROI and growth for investors.
Investors also benefit from profitable exit strategies in multi-family properties. Most investors know the old saying, “You make money when you buy,” and to see more of that money, real estate exits must 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 taxes as long as they reinvest the proceeds in similar assets of equal or greater value.
Jetty continued, “For today’s investor, multifamily properties offer passive income, diversification, scale, and maximum tax efficiency, making it a smart long-term, strategic addition to an investment portfolio.”
Vive Funds is a multifamily real estate investment firm that offers investors the opportunity to diversify their portfolios and generate strong returns by investing in properties in key markets. For more information on the tax benefits of multi-family properties, please visit https://vivefunds.com.
About Vive Funding
Vive Funds was launched to fulfill our mission of carefully curating high quality real estate investments. Our innovative strategy and our comprehensive process drive our core value of investor-centric projects. Vive has developed a rich network of global business partners to make early and transformational investments in high-performing potential assets.
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