It's That Time Of The Year Again
Taxes are either something for you to look forward to or something you have been dreading all year. However, for those expecting to receive money back, make sure you put it to good use. Real estate investors, in particular, should consider using it for their company’s advantage. This can position any investor in a way that will help them take advantage of 2014.
Tax time is one of the biggest consumer spending times of the year. Many tighten their belts all year long in anticipation of a big refund check from the IRS. However, for most, putting a down payment on an expensive new car, buying a boat, or heading off to Disneyland isn’t the best financial move.
In the past, millions have blown their tax refund checks in a matter of days. Those that do may find themselves back in the red before their next set of bills reaches the mailbox. With that being said, what might be a better move to make with your ‘bonus’ from the Internal Revenue Service? Real estate investors should consider the following approaches:
1. Pay Down Debt
Paying down debt is a wise move for many. Cancelling out high rate car loans, pay day loans and credit cards could leave a lot more disposable income left on the table each week . Homeowners might be interested in putting down a chunk towards reducing the principal on their mortgage, liens affecting their home’s title, or even those still underwater – dedicating that cash to bring to the closing table.
2. Home Improvements
Homeowners planning to stay for the long run, those hoping to sell houses fast, and investors may benefit from home improvements. Each addition should improve the appeal of your property. Just make sure to do your homework and educate yourself on which types of improvements will not only yield positive results but deliver the maximum returns on the investment.
3. Get a Better Accountant
It might sound weird, but for those that didn’t get as much as they hoped for back from the tax man this year, perhaps investing in a better accountant for tax planning and filing for next year could deliver some of the best returns.
4. Fund Your IRA
If you don’t have an IRA, get one. Make sure you contribute as much as you can and convert to a ‘real estate’ or self-directed IRA, which can be used to invest for higher returns.
5. Invest in Real Estate
Even with a few thousand dollars, there are ways to invest in real estate. It doesn’t take a genius to figure out how much better this can be than blowing the capital on hand. Use it to flip houses, as a down payment on an income producing rental property, to buy lots or land for long term holding either as an investment, inheritance or to build your dream home on in the future, or even partner up with someone on something larger.
6. Invest in Your Kids
Instead of simply investing in real estate, why not put it all together and set your kids up with some funds to invest in real estate for themselves. This way, they can start taking control of their financial future early.
7. More Tax Deductions
If you absolutely have to blow the money, at least do it on items which could potentially yield more tax deductions and write offs next year.