Investing in deficit property in 2024 represents an advanced tax strategy for real estate investors looking to reduce their tax burden while building a real estate portfolio. This approach allows for significant tax savings by leveraging deductible expenses related to the renovation of older properties.
By investing in an older property in need of renovation, investors can deduct a portion of these expenses from their rental income, thus reducing their taxable base. According to current tax legislation, deductible expenses include renovation, repair, maintenance costs, as well as interest on loans related to acquisition and renovations.
For example, if an investor spends €50,000 on renovation works for a rental property, they can deduct this amount from their rental income, resulting in a significant reduction in their taxable base. Depending on the investor’s marginal tax rate, this can translate into substantial tax savings.
Moreover, deficit property investment offers the opportunity to carry forward unused deficit from one year to the next, smoothing out the tax impact over several years. This tax flexibility provides investors with an additional opportunity to optimize their tax situation and maximize their tax savings.
In summary, deficit property investment is an advanced tax strategy that allows real estate investors to minimize their taxes while building a sustainable real estate portfolio. By leveraging deductible expenses related to the renovation of older properties, investors can benefit from substantial tax savings and long-term tax optimization.