Tax Loophole, Reduce Tax Liability on Large Amount of Reportable Income

If Income Deferment is not your thing, then you may want to review the following method of reducing taxes, however the limit is only $25,000.  If you need a larger deduction, contact a Financial Planner and learn more about "income deferment"

One way to reduce the tax liability of a large amount of income is to purchase a large apartment complex. 

Why?  Take a look at Schedule E.  This would be the Form you would report Rental Income on.

This form is loaded with ongoing deductions for rental property.  And the largest deduction could be the depreciation of the property, over a 20 or 30 year period of time, and the mortgage interest.

Of course, you would want to put a down-payment on the property, however, you do not want to pay cash for the property, at least not up front.  The mortgage interest for the property will go a long way in helping you to reduce your tax liability.

The are down sides to this loophole, which you will want to discuss with your tax attorney or enrolled agent.  When you sell this type of property you are looking at capital gains taxes.  Flipping this type of property is unlike flipping a house and living there for two years, to avoid capital gains taxes.
 
Not to worry if you don't want to manage the rental property (and you shouldn't) all fees for management are tax deductible.  Every time you start your auto for the benefit of the rental property, these miles are tax deductible.  If you should have a positive cash flow, the tax deductions should help you offset your total income.

You can take up to a $25,000 loss on the property.  You should have your tax professional work up your expected tax liability, to ensure that you can benefit from making such a purchase.  You will need a trusting real estate broker, an  experienced tax attorney or enrolled agent, and a good property management company to put this idea off.

You will need to learn the rental laws of the state, where the property is located, and most of all you will need to make sure you purchase the property at the right price.

Now for the grand, or not so grand way, U.S. Taxpayers are avoiding millions in taxes.  Let us know what you think?