Warren  wrote:
 
How can I lower my taxable income ? I noticed I can get a good tax break
if I invest in real-estate.

Not as good as before 1986.  You get a good break by buying your own home
-- have you done that?

I've been considering buying some hangar space at my local airport. The
property is set-up like a condo-arrangement. I also know I can rent these
hangars out almost immediately...on the other hand...there are other
properties (residential) I could get into cheap, repair (yes, I have the
knowledge/skills/experience to do so) and exit...

> Careful about that last.  If it's homes that you're living in, that works
> great because you roll the capital gain over into the next house.  But
> still be careful.  If you plan to turn it around as soon as you're done --
> you need to earn a lot on the fixxer upper to eat the real estate
> commissions and other closing costs and still come out ahead.
> 
> If you're talking about fixing up and then selling investment property --
> no capital gain rollover or exemption, so whatever you earn is taxable as
> soon as you sell it.
> 
> For tax advantage in real estate, you need to be a landlord.  Capital
> gains on the property are tax deferred until you sell.  Any positive cash
> flow or equity buildup (principal portion of a mortgage payment) is
> probably also tax deferred because it can be offset by depreciation.
> 
> I believe you can also incorporate as a real estate investment company S
> corporation, which would allow you to deduct losses (including paper ones
> like depreciation) from ordinary income (I'm not sure about this -- check
> with an accountant or lawyer).
> 
> But really -- you get similar advantages with buy and hold of low/no
> dividend stocks.
> 
> Real estate is a good deal if you don't mind doing the work involved, but
> since 1986, I wouldn't say that it's significantly more tax advantaged
> than stocks.  Your own home, however, is.  If you're renting for enough to
> pay the mortgage on a decent house -- buy now.
> 
> Michael

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