28 Oct The Clock is Ticking
Real estate investors should act now in order to benefit from some key tax exemptions. Specifically, the rules on bonus depreciation will become far less attractive to real estate investors effective January 1, 2023.
Currently, when purchasing a qualified real estate asset, an investor is legally permitted to immediately deduct a large percentage of the purchase price rather than depreciate the asset over a twenty or thirty year period. As a result, the investor is able to achieve a substantial short term tax benefit.
Effective January 1, 2023, the aforementioned tax benefit will be phased out by the government by reducing the short term tax advantage by 20% annually until the bonus depreciation is no longer in play for an investor.
Since we are rapidly approaching year end 2022, real estate investors need to move quickly to close on their new purchase targets prior to the new year. In that banks typically move very slowly and methodically in making decisions on all loan requests, real estate investors will not benefit by attempting to secure financing from banks for their real estate purchases. The probability of not being able to close by year is too great of a risk. Instead, real estate investors should seek to access short term bridge financing from a private lender who can react quickly to their financing needs. Proficient private lenders can routinely close loans within one to two weeks from the time that they receive the loan request thus ensuring that the investor will be able to close on the purchase of the asset in a timely manner.
Upon obtaining financing from a private lender to close on the purchase prior to year end. The investor can then go back to a bank to secure long term financing on that asset and use the proceeds to pay off the short term bridge loan from the private lender.
Worth Avenue Capital specializes in arranging debt financing for both small businesses and real estate developers/investors and also handles bank workouts for those same clients. You can learn more about WAC by taking a look at the website and Youtube videos or by contacting WAC’s principal, Michael M. Ciaburri at worthavenuecapital@gmail.com or (203) 605-4082. WAC maintains offices in both Guilford and Greenwich, Connecticut as well as Palm Beach, Florida. Be sure to follow @worthavecapital on Twitter for the latest lending news.