Investing in usa homes
The advantages of investing in rental property in USA
There are many investors investing in USA homes in the buy–to–let category in locations with year round tourist traffic like Phoenix, Las Vegas and Florida. There are many advantages of investing in rental property in USA.
- Rental income gives you a tidy surplus after you have paid the mortgages, the taxes, and the insurance have been paid.
- There are tax benefits of buying rental property. Every time you buy a rental property, the IRS allows you to "depreciate" the property over 27.5 years. Therefore the property investor can deduct this depreciation expense against active income from his/her job.
IRS lets you depreciate $ 255 000
Here is an example. Say you buy a $300,000 rental property. The IRS allows you to depreciate the building. 85% of the purchase price is used to determine the physical value of the house. In this example, the IRS lets you depreciate $ 255 000 over 27.5 years. This is equal to $ 9272 per year which you can take as a depreciation expense against your active income. In other words, you can make a deduction of $ 9272 from your annual income.
You can significantly reduce your taxable income by investing in more rental properties. In fact many USA property investors investing in USA homes do not pay federal or state income taxes because they have earned a significant depreciation expense from their investment in rental properties.
Owning Rental Property
Another benefit of investing in USA homes and owning rental property is appreciation in value of the property. If you buy property and hold on it, your home may appreciate significantly every year.
This is how most property investors build up their long-term wealth. Even a 5% appreciation over 10 years will add up to a tidy sum. In fact most USA property investors investing in USA homes say that it even beats what they make at their regular jobs.