Estate taxes take a real bite out of your dollar

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With real estate being touted as a wise investment in ones future, it is important that you know all of the positives and negatives that come along with being a property holder. Taxation is a familiar road that all of us travel, but it is important that you look beyond your tunnel vision and actually see what is happening to your dollar.

Recently the Wall Street Journal did opinion piece on the amount of times that a dollar really gets taxed. This information opened Pandora's Box with regards to real estate investing, and the level of taxation that is placed upon a real estate investor's dollar.

If you look at an individual dollar from the time that it is earned throughout an entire year, there are at least three distinct times that this dollar can get a bite taken out of it by local and federal gluttons.

The first bite comes as personal earnings are taxed by federal and state income taxes. The next bite comes in the form of the 'Capital Gains Tax'. If you invest your once bitten dollar into a real estate deal, and you are fortunate enough to receive a profit back, your dollar gets munched on for the second time by the capital gains tax. The third and final bite is the federal death (estate) tax. The federal death tax is applied to those who have accumulated a personal wealth that exceeds the threshold of $3.5 million

The amount of taxation that is addressed above does not include additional nips like; property taxes, sales taxes, and excise taxes. The current system that is in place has been carefully structured to 'take a little here and a little there'. When you look at eh whole picture you may just be amazed at how little you have left of your hard earned dollar.

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Article Tags: real estate tax, state income taxes, sales tax, excise tax, capital gains tax

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