What is the tax policy of real estate investment in the United States?
First, prepare for buying a house
As a smart property buyer, you should plan how to minimize the taxes you need to pay in the future from the moment you start preparing to buy a house. To put it simply, we can start with the following points:
Usage: whether it is used for self-occupation or rental to generate cash flow.
Time: Are you going to sell it in the near future? Are you looking forward to enjoying it?
Status: whether you are a tax citizen of the United States (different from the American citizen stipulated in the immigration law).
Liabilities: whether to consider asset preservation, or whether to separate real estate liabilities from individuals.
Why should we consider using it?
Because the purpose of the house is related to what tax bills you need to handle, what expenses can be reduced and exempted, and what vouchers and documents need to be saved or recorded for use when filing tax returns. At the same time, you need to consider the form of owning real estate, which can better achieve your goal.
The main forms of real estate ownership:
1, directly owned by individuals.
2. Formal ownership of the company
As far as the results of tax declaration are concerned, there is no obvious difference between the two methods. It will be more troublesome to have company forms, and there are many forms to fill in, but the advantage is that when the property invested by the company has an accident, individuals can avoid relevant legal responsibilities.
In addition, there are many other policies that will affect your relationship with real estate tax, so I won't list them here. What I want to say is that it is very important to avoid taxes legally and reasonably and buy a house as a whole!
Two. Buy real estate
After buying a house, you will definitely receive a "transaction/settlement form", commonly known as HD- 1, which records the detailed settlement time, the address of the real estate, and a list of all expenses for completing the transaction. You must keep it, because it determines the housing cost (basis) when you sell the house to calculate VAT. Both the buyer and the seller have details of the transaction amount, but you only need to pay attention to the details of the buyer. Your transaction cost, including commission and property right cost, can be added to your purchase price to increase the cost of the house.
For example, if the purchase price of a house is 500,000, and your HD- 1 table shows that the expenses are 20,000, then the cost when you sell the house is 520,000, and the value-added part is reduced by 20,000. If you buy a house in the name of a company, your closing costs and loan costs need to be included in intangible assets, and then amortized according to the loan term (similar to depreciation).
Three. Housing management
After you get the house, the owner should consider how income and expenses affect your tax payment. So what preferential policies can homeowners enjoy? Next, let's see what expenses you can use to reasonably reduce taxes:
1, mortgage interest and points (mortgage interest &; Integral)
Mortgage interest can be deducted from your taxable income by adding Sch A sub-item deduction (for self-occupation) or Sch E (for rental). Whether taxpayers buy a new house or apply for refinancing, a high proportion of mortgage interest in the first few years of repayment can save you a lot of tax.
2. Mortgage insurance.
This discount is more important for low-income homeowners in the United States, because they often can't afford a high down payment, and they must buy personal mortgage insurance before the net value of their houses grows to 20%, which can be filled in the Sch A sub-item deduction (applicable to self-occupation). Therefore, once your adjusted net income (AGI) is as high as 65,438+009,000 dollars (husband and wife taxpayers) or 54,500 dollars (husband and wife taxpayers pay taxes separately or single taxpayers), you can no longer enjoy this preferential treatment because your income is too high.
3. Property tax/local tax
The local and state property taxes you pay can be deducted from your federal and state taxes by adding SCA itemized deduction (for self-occupation) or SCE (for lease). The only difference from the first year is that it is no longer hidden in your HD- 1, and you will receive a separate property tax report.
4. Unexpected loss
Many people don't know this. For example, if the house was destroyed by the flood, the house lost 500,000 yuan and the insurance paid 400,000 yuan, then the remaining 6,543.8+million yuan is your accidental loss, which can be deducted by Sch A, and the deductible can be obtained after the final limit is calculated.
5, renovation (improvement) costs
For example, the purchase price of the house is 500,000, and the owner spent 200,000 on renovation, so has the house appreciated? After the house is sold, the cost (foundation) of the owner will increase by about 200 thousand, and the value-added part will be reduced accordingly when calculating the value-added tax. This is the so-called offset value-added profit tax
6, residential energy-saving and environmental protection decoration and improvement (residential energy-saving credit)
The American government encourages taxpayers to save energy and protect the environment. Any transformation and improvement related to improving household energy efficiency, including installing solar panels, energy-saving water heaters, insulated doors and windows, etc. , you can get up to $65,438+0,000 residential energy points. Tax credit is different from all kinds of tax relief. They are items that directly reduce or exempt the corresponding tax amount on the basis of the taxable income calculated in the previous step, so you will find it in the lower position of the 1040 tax table, that is, lines 48 to 54. Reconstruction projects of commercial real estate based on medical needs, such as installing wheelchair ramps, doors and windows convenient for the disabled, bathtubs, etc. , you can get tax credit or tax reduction.
7. Ministry of Interior
If you use your own study as your home office, you can directly put the percentage of mortgage interest, property tax, utilities, insurance and other expenses as business expenses in Schedule C according to the proportion of the office to the housing area, which is used to deduct the income from self-employment. If you think it's too cumbersome to track so many expenses, the IRS also provides you with a simple alternative, that is, you can deduct $5/square foot (up to $65,438+0,500/year) for home office expenses.