Tax Deductible Investments

Most people do not look forward to paying their tax bills. This is one area that although it is essential, it can be a minefield. Obviously, everyone wants to have a lower tax bill to pay so are there any ways you can reduce your tax bill legitimately? The short answer is yes – you can reduce your annual tax bill with tax-deductible investments. There are various options available for you to consider and not only will they help you reduce your tax bill, some may also help you to increase your income.

Invest in real estate
Although prices have dropped in housing and real estate which can make it difficult to sell property, it is a prime investment opportunity for buying property. With so many foreclosures, you can also get a great bargain too. In fact, the lower prices can be to your advantage when buying in terms of tax-deductible investments. Property tax on real estate is tax deductible. Additionally, if you buy a property with the intention of renting it out, you can also deduct the rental payments for maintaining the property or keeping it in a good state of repair. Real estate is an excellent tax-deductible investment and many people are realizing the intelligence of investing in this area. Real estate fluctuates in value and if you can afford to buy at the low prices now, there is every confidence that the market will recover, although it may take a little time, but this will reap dividends for you and will make a nice little nest egg.

Investing in energy
Little known tax-deductible investments are in commodities such as gas and oil. There are a number of ways you can do this, from being actively involved in private projects or buying stocks from large corporate companies. Your share of expenses in this area of investment can be written off. This also includes activities such as drilling costs. You may be required to invest quite a bit of money in this venture so if you have little available capital, it may not be something you realistically consider.

Investing in agriculture
Some people choose to invest in agricultural schemes such as crops. However, you do need to be very careful in this area and the minimum amount to invest is usually a fairly substantial sum. Crops by their very nature are unpredictable and you may end up losing most of your investment money if you are not careful in what you invest in; add to this the maturity time for some crops may well be up to 10 years in the future. Simply put, there are better tax-deductible investments to choose from.

Giving to charity
Helping a charity is not only fulfilling and worthwhile but it is also a tax-deductible investment. Many people choose to give to charities regularly or periodically and forget that their gift payments are tax deductible. In order to claim the tax benefit in gifting to charities, you will need to have a receipt or statement to prove your gift to qualify.

Medical insurance
Paying for medical insurance is one that is of life’s necessitates to ensure good health and dental care when needed. These payments are tax deductible where your payments exceed 7.5% of your income. Even better news is that if you are self-employed, the whole amount is tax deductible.

Retirement
Saving for your retirement is not only the sensible thing to do; it is also one of the best tax-deductible investments available. As you are probably aware, there are quite a number of different pension savings schemes to choose from to suit different circumstances.

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