CalYan Investments

What if any are the tax advantages to buying income properties?

Tax questions are best answered by a CPA or a CFA (Certified Financial Advisor).. Setting that caveat aside, I can speak from more of a personal experience, as well from years of advising & transacting with Clients of a Real Estate Brokerage..

The biggest advantage to owning  rental income properties comes from the tax treatment if you own them for at least 2 years and it has been rented out (not your residence).

You are allowed to roll any profits from the transaction into a tax-deferred account, from which, if you re-invest the same amount or higher, you can get by without any immediate tax hit on your profits. This is officially called a 1031 exchange.. I’ll have more to say on this in a later blog, will try to get a specialist to cover this in detail. There are several fine-prints and gotchas of course!

But, this tax deferred exchange, along with a long term investment plan, can help build a steadily growing ‘wealth fund’ that increases in magnitude every time you re-invest, to take advantage of market highs and lows.

There are other advantages to rental income properties if titled under a company or a trust, as they can be used as POFs (proof of funds), can come handy for tax write-offs on expenses.. These are definitely topics for your good CPA to be actively involved in.

Let me know if you need recommendations for good CPAs & CFAs in Northern California?

Happy to chat more.. call/txt me @510.676.1940

Till next time… I will answer another question: Do I Buy Cash or Finance my investment property? How do I finance my investment? What rates can I expect?



Should I buy Rental Income Properties in California?

Rental Income properties are a great way to generate a steady income flow for your future.. with savings accounts yields at abysmally low rates, generating 6% or more in interest income, plus long term inflation adjusted appreciation is definitely worth looking into..

But is the California market saturated? Are yield curves flattening?

To me the answer is straightforward: If you live here, say in SF Bay Area, you obviously know that home values have gone up 30-35% past 6 years..yield curves in key urban pockets will likely flatten from an investment perspective…but outside of the ‘hot’ job market areas,  the actual appreciation has been slower (10-15% ave), at a Lower purchase price… in part due to the drought..

But, as the demographic is aging, home equities at an all time high, broad band connectivity improving leaps and bounds, I think there is significant investment upside as well as life style benefits for moving to outer areas, away from traditionally dense urban centers.

Which areas? That’s a somewhat subjective question, depending on the investors risk appetite, long term financial goals. 

Happy to chat more.. call/txt me @510.676.1940

Till next time.. I will answer a question I get asked a lot: What if any are the tax advantages to buying income properties?