February 2023

May 15, 2024

FEBRUARY NEWSLETTERBUYERS ARE BACK  | INVESTMENT SERIES | TAX TIME | RECIPE OF THE MONTHBUYERS ARE BACK (IT'S A GREAT TIME TO SELL!)

TAX BENEFITS OF OWNING REAL ESTATE

Owning real estate has tax benefits.

If you bought or sold a home in 2022, you may qualify for one or more deductions on your 2022 return. You should always talk to a Certified Public Accountant (CPA) for more insight on what deductions you qualify for. Potential deductions for homeowners can include:

  1. Property taxes - Homeowners who itemize their tax returns can deduct property taxes they pay on their main residence and any other real estate they own.
  2. Private Mortgage Insurance (PMI) - You can deduct your mortgage insurance payments on your itemized tax return.
  3. Mortgage interest - If you have a mortgage on your home, you can take advantage of the mortgage interest deduction. You can lower your taxable income through this itemized deduction of mortgage interest.
  4. Points Paid at Closing - If points are purchased to reduce the mortgage’s interest rate, you can deduct the cost of the discount points.  

If you bought or sold a home in 2022 and need your settlement statement to assess potential tax write-offs, please send an email!REAL ESTATE INVESTMENT SERIES: PART 2

January's newsletter profiled why Colorado remains a solid place to invest in real estate. This month's series outlines why many of the Five Four Real Estate team members own one or more investment properties.

1. Rental income

Ongoing income from renters is arguably the number one reason why many investors choose  to invest in real estate. Although having a positive cash flow every month isn’t guaranteed, rental property can generate significant annual yields.

2. Property value appreciation

Home prices in Colorado have increased 48 out of the last 50 years. The Federal Reserve reports, the median sales price of houses sold in the U.S. has increased by more than 64% over the past decade.

3. Tax benefits

The tax benefits available to owners of real estate provide another reason for buying rental property. The Internal Revenue Code is friendly to investment property owners, with tax-deductible expenses such as:

  • Property management and leasing fees
  • Maintenance and repairs
  • Property taxes and mortgage interest
  • Depreciation to reduce taxable net income
  • Owner deductions such as travel expenses and continuing education

4. Inflation hedge

Rental property also acts as a hedge against inflation, when rent prices and home values increase faster than the annual rate of inflation. Here’s how the math works.

According to the U.S. Bureau of Labor Statistics, the 12-month percentage change in the Consumer Price Index (CPI) is 5.3%. However, even though prices are going up, home prices and rents are rising even faster.

5. Use of leverage

Financing the purchase of a rental property using other people’s money (OPM) is another reason for buying rental properties. The cash-on-cash return formula illustrates how real estate investors can use leverage to boost returns on a rental property.

RECIPE OF THE MONTH: JALAPENO POPPER DIP

Just in time for Game Day, this jalapeno popper dip is insanely addictive. Leave out the bacon to keep it vegetarian, or add the bacon in for additional crunch + flavor. It's a 10/10.INGREDIENTS:

  • 4 ounces diced jalapeños well drained OR 4-6 fresh jalapeños, roasted and diced (include seeds if you like it really spicy)
  • 3-4 slices of crispy bacon, crumbled (optional)
  • 8 ounces cream cheese softened
  • 1 cup sour cream
  • 1 teaspoon garlic powder
  • 2 cups cheddar cheese shredded
  • ¾ cup parmesan cheese shredded

FOR THE TOPPING:

  • 1 cup Panko bread crumbs
  • 4 tablespoons butter or margarine, melted
  • ¼ cup parmesan cheese shredded
  • 1 tablespoon fresh parsley

DIRECTIONS:

  1. Preheat the oven to 375 degrees F.
  2. With a mixer on medium, combine cream cheese, garlic powder and sour cream until fluffy.
  3. Add cheddar cheese, ¾ cup parmesan cheese, bacon (if desired) and diced jalapeños, mix well.
  4. Spread into an 8x8 baking dish.
  5. Combine bread crumbs, melted butter, ¼ cup shredded parmesan cheese, and parsley.
  6. Sprinkle the crumb topping over the cream cheese mixture.
  7. Bake 15-20 minutes, or until hot and breadcrumbs are golden brown.

About FiveFour Real Estate

We hold our licenses at the brokerage Five Four Real Estate. The name Five Four Real Estate derives its name from 5.4%, which is the average annual home appreciation rate in the U.S. over the last 50 years.  If you buy a home and put 20% down, you are leveraging your money 5X. A 5.4% increase in your home's value means a 27% ROI.

Thinking of Buying or Selling?  Know someone who is?We are NEVER too busy for your referrals!

OUR PROMISE TO OUR CLIENTS

This could be one of the largest and most important financial decisions you will make in your lifetime, and you deserve an experienced partner that understands the intricacies of Colorado real estate.

We promise to always keep you informed about the rapidly changing market and educate you throughout the entire process. We promise to protect your best interests and treat your home or investment like it’s one of our own. We promise to work our hardest to find the perfect home for you and your family with as little stress as possible.  

We value your trust and hope to continue supporting you in your lifetime even after your sale or purchase is complete. This goes beyond real estate to us, it’s the beginning of a lifelong friendship.

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