The simple truth is that if you are going to buy and build your new home, you must be doing it right, because the taxes you pay for your new home cannot be paid for when you build it.
If you live in a tax-friendly state, you should get the opportunity to deduct your real property taxes in your taxes going forward. In fact, you should have the opportunity to claim a deduction for your housing costs as well. Your local county or municipality will look specifically at whether you have a housing expense and you will likely be able to claim a deduction for it.
Tax-friendly states are getting more and more competitive in this regard, and many of the top tax-friendly states are now having debates about whether to allow home builders to deduct their real property taxes. In California, for example, the tax-friendly counties are having a full-blown debate. In the past, these counties would have been able to deduct their taxes on a property-sales basis.
What is this debate about? Well, for many years, the California tax code allowed real estate developers to do just that. But in recent years they have been forced to make adjustments in order to take advantage of deductions like income or property taxes for home buyers in these same states. Because California is a tax-friendly state, many home builders (especially in the Bay Area) have been able to claim their taxes as income for real estate sales.
This is probably one of the first times that I’m hearing about this in the real estate industry. I don’t think it’s a big deal, though I would be interested to know if any of my colleagues in the industry have had any experience with it.
We’re starting to see a lot of business owners in these states, making an attempt to claim deductions and taxes for their home buying activities. But the business owners of these states aren’t really doing it, but are making a habit of claiming their taxes as income.
So here’s a question, how much income do these business owners claim as deductions? As you should know, the IRS has a formula to determine how much you can deduct in an individual’s tax return, and it uses that formula to determine how much the business owner can deduct in their return. Here’s what the formula looks like if you have 10 employees that you hire full time to do the work of two teams of two employees.
So if your gross receipts are $10,000 per month (and taxes are $5,000 per year), then your deductions are $500 per month for the team of two employees. Your total deduction goes up to $1,250 per month. You can use that $500 as your income, and your deductible goes down to $1,000 per month.
The formula isn’t all that complicated. It’s just a way to calculate the amount of taxes you have to pay before you start taking home a large sum of money. In this case, that is the amount of taxes you pay in after tax operating income. So for example, if you had 10 employees and let’s say your gross receipts were 10,000 per month and your taxes were 5,000 per year then your after tax operating income would be 5,000 per month.