How to Deduct Taxes When Purchasing a Home

Toby Mathis and Ian Hanuscin of Anderson Advisors talk about how to deduct taxes when purchasing a home and answer other tax questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

• How can I eliminate paying capital gains? I recently sold my rental property because I needed the cash to pay off a divorce settlement. What are my options? Since you already sold the rental property, doing a 1031 exchange is no longer an option, but a qualified opportunity zone is an option to defer the tax
• Which is better? A 1031 exchange with limited time and capital availability or paying capital gains with unlimited time available and no restrictions on capital? Depends on your income bracket, so before doing a 1031, talk to your tax person
• After receiving a sizable amount of money, how soon after do taxes need to be paid? Usually, it’s 90% of the current year’s income or either 100 or 110% of last year’s income for tax liability
• If I register a vehicle under my company name, is this tax deductible? If it’s 100% business use, yes; if not, determine the percentage of use and deduct that amount

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Resources:

Capital Gains and Losses

https://www.irs.gov/taxtopics/tc409

1031 Exchange

https://www.irs.gov/pub/irs-news/fs-08-18.pdf

Real Estate Professional Requirements

https://www.aicpa.org/resources/article/tax-rules-for-real-estate-professionals

Qualified Opportunity Zones

https://www.irs.gov/credits-deductions/businesses/opportunity-zones

Toby Mathis

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Anderson Advisors

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