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Make Your Tax Refund Work For Your Real Estate Business


With the impending threat of tax season now behind us, refunds are all that is left. Investors are among those that typically experience great tax benefits, as it is the nature of the industry.  For those of you fortunate enough to receive money this year, there are several scenarios in which the extra funds can help. However, investors are advised to put that money to work in their real estate business. Having said that, how can your tax refund help your investment business? More importantly, where should the money you receive from the government be allocated?

Few might love preparing and filing income taxes, but now it’s done and refunds are in the air. It is time to decide how the money you receive will be spent. According to IRS statistics, as of April 14th, 2014, more people filed tax returns this year, and more money is being paid out. Even though visits to the IRS.gov site were down 10% year-over-year, almost 78.8 million tax refunds are being dispersed. Refund amounts are up too, with an average of $2,792 and almost $220 billion in total so far.

There may be no stopping a huge percentage of consumers aimlessly blowing their refund money on frivolous items which instantly become worthless. However, for the savvy tax payer, there are at least several great ways to use that money to make even more:

1. Pay Off Your Home Mortgage

While not everyone might be getting enough money back from the tax man to cancel out their entire mortgage, many could pay down a chunk of principal, catch up on past due property taxes or wipe out a high rate second mortgage. Of course, this may be the best use of this cash for those that don’t have a way to put it to work for higher returns.

2. Real Estate Education

For those that aren’t aware of, or comfortable enough with their depth of knowledge to invest their return in the property market, perhaps the best way to invest it is in a real estate investing education. The returns of that investment will not only be compounded year after year, but if applied, generation after generation.

3. Loan It

Those receiving tax refunds in 2014 can always loan their cash to other experienced real estate investors eager to capitalize on the current market. Doing so will result in a nice return on your investment and net you more profits than simply putting it in a bank.

4. Buy Land

While perhaps not the sexiest of all investments in real estate at the moment, lots and land can be a great way to build up long term wealth.

5. Income Investment Properties

Instead of just holding onto a piece of land for an indefinite period of time, why not invest in one which while keep on giving back income each and every month? This could be a small single-family home, duplex, or even a mobile home park.

6. Self-Directed IRAs

For those wanting to just park their money for a moment and take a breather while determining the best move, self directed IRAs can provide a great opportunity. Then investment income can be grown tax free or tax deferred for larger gains and less bleed to the IRS each April 15th.

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