Passive Income Tax Reduction Strategies refer to various methods and techniques employed by individuals and businesses to minimize the tax liability associated with income generated from passive sources, such as rental properties, dividends, or interest.
These strategies may include:
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Depreciation Deductions: Utilizing depreciation on rental properties or business assets to reduce taxable income.
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1031 Exchange: A tax-deferred exchange of real estate, allowing investors to defer capital gains taxes when selling a property and reinvesting the proceeds into a similar property.
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Passive Activity Loss Rules: Leveraging losses from passive activities to offset passive income, thereby reducing overall tax liability.
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Tax Credits: Taking advantage of various tax credits available for energy efficiency improvements or low-income housing investments.
By effectively implementing these strategies, individuals and businesses can enhance their cash flow and retain more of their income.
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