Editing 1course Real Estate (section)

==== Understanding Tax Benefits ====
Real estate investing offers numerous tax advantages. Here’s how to take full advantage of them:

# '''Tax Deductions:'''
#* '''Mortgage Interest:''' Deduct the interest paid on your mortgage. This can significantly reduce your taxable income.
#* '''Property Taxes:''' Deduct property taxes paid on your rental property.
#* '''Operating Expenses:''' Deduct expenses related to managing and maintaining your property, such as repairs, utilities, insurance, and property management fees.
#* '''Depreciation:''' Depreciate the cost of your property over 27.5 years (for residential properties), allowing you to deduct a portion of the property’s value each year.
# '''Capital Gains and 1031 Exchanges:'''
#* '''Capital Gains Tax:''' When you sell a rental property, you may be subject to capital gains tax on the profit. However, if you’ve owned the property for more than a year, you’ll benefit from the lower long-term capital gains tax rate.
#* '''1031 Exchange:''' Defer capital gains taxes by reinvesting the proceeds from the sale of one property into a similar property within a specific time frame. This strategy allows you to grow your real estate portfolio without immediate tax liabilities.