We all know taxes are a pain. Just the thought of computing what you owe to the government may already give you a headache. How much more painful is it to watch money being taken out of your bank account, especially if a property isn’t performing as well as you expected it would? Try not to think of it as a lost cause just yet. There are ways to manage your taxes, take advantage of exemptions, and turn a non-profitable property into a money-generating enterprise.
Take Advantage of 1031 Exchange
The government expects capital tax gains generated by your property to be in their coffers in a timely manner. You may be at risk of tax evasion if you fail to pay appropriate taxes for the estate you own. There shouldn’t be any problem for an honest individual who has been earning steadily off the ownership of certain properties. If that is not the case and you want to branch off to a different business model, however, not only will you need to continue paying those tax gains, the chance to get a mortgage for another property in Idaho might be lowered due to your existing liability. Here enters a 1031 exchange, which allows you to defer recognition of capital gains in exchange for like-kind properties. The properties being considered should be equal in value, without the capital gains getting in the way. If you would like to take advantage of this exchange, fill out the required forms properly and consult a lawyer about like-kind properties that will qualify for the exchange.
Turn a House into a Rental Property
You don’t want to sell your old house but no one is using it anymore and it’s just costing you tax and maintenance fees every year. It’s property too personal to sell, but perhaps you can let a family member rent it until you figure out what to do with it. You can rent to individuals too, but they may not take care of it as much as a family will. Afraid of strangers damaging the property? Offer it for rent only to people you know, especially relatives who understand the importance of the house and that this isn’t a permanent setup for both of you. This way, you’re getting something off the property and you’re also helping a relative on the verge of homelessness.
Repurpose the Property During Off-peak Hours
Many New York restaurants have already converted their premises to communal working spaces during the day. It can be done in any Idaho restaurant as well, so if you have that property not generating enough income from lunch service, perhaps it’s time to stop serving food and start laying out power strips. The way this goes right now is a company offering co-working spaces takes over during the day, making sure everyone is out as the restaurant resumes its dinner service. If there’s no such co-working space provider in your neighborhood, you can take on the task yourself. This means all profits go to you, which really isn’t a bad thing considering you don’t need to buy a second property to make it happen.
You won’t be in trouble for tax evasion if you find ways to use your property wisely. Get legal help and get creative with how you conduct business.