DALLAS, Aug. 22, 2022 (GLOBE NEWSWIRE) -- Vive Funds, a best-in-class multifamily investment firm, shares strategic tax benefits for investing in multifamily properties instead of single-family homes as a way to expedite real estate portfolio growth. In 2022 alone, multifamily property growth will see a record-breaking 10% increase from $213 billion to $234 billion with over 300,000 new units being built. A booming multifamily market, cultural shifts, roughly a 95% occupancy rate, consistently low delinquency, and attractive tax benefits make multifamily properties a strategic, high-return investment.
Veena Jetti, Founder of Vive Funds, points out the several ways investors can benefit from this growing market. "Not only can multifamily investments generate significant passive income, but investors see strong tax benefits such as depreciation, long-term capital gains, and advantageous exit strategies with their investments."
When it comes to real estate investing, one of the best tax deductions investors enjoy is depreciation. Depreciation helps lower, and sometimes even eliminate, the net taxable income produced by the property. The IRS understands that assets may wear down over time, and they grant an allowance given for exhaustion or wear and tear of the property. Investors can deduct depreciation on residential property for 27.5 years and 39 years for commercial real estate.
Another aspect of this is the bonus depreciation deduction. Deductions for property improvements was increased from 50% to 100% by the Tax Cuts and Jobs Act of 2017 and will be available through the 2022 tax year. Deductions, however, will gradually decline until it expires at the end of the 2026 tax year.
Another tax benefit of multifamily properties is long-term capital gains. Lower tax rates are a huge advantage when it comes to building wealth, and when the property is sold, the proceeds are taxed at a lower, more favorable tax rate. Long-term capital gains are either 0%, 15% or 20%, depending on the household's taxable income, instead of the 30% for short-term capital gains. To get the benefit of long-term capital gains, the property must be held for at least one year or longer, which aligns with Vive Funds' mission to power efficient ROI and growth for investors.
Investors also benefit from advantageous exit strategies in multifamily properties. As many investors know the old adage, "You make your money when you buy," and to see more of that money, real estate exits should be planned accordingly. Luckily, there is no shortage of efficient real estate exit strategies. For example, the most common is the 1031 exchange, which allows investors to defer paying capital gains tax as long as they reinvest the proceeds in a similar property of equal or greater value.
Jetti continued, "For today's investor, multifamily properties offer passive income, diversification, scale, and maximum tax efficiency, making it a smart long-term, strategic addition to an investment portfolio."
Vive Funds is a multifamily real estate investment firm that provides investors the opportunity to diversify their portfolios and generate strong returns by investing in properties across key markets. For more information on tax advantages of multifamily properties, please visit https://vivefunds.com.
About Vive Funds
Vive Funds was launched to fulfill our mission of carefully curating high-quality real estate investments. Our innovative strategy and our detailed process drive our core value of investor-centric projects. Vive has developed a rich network of global business partners to make early and transformational investments in assets that have the potential to do great things.
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