Joanna James
Every investor hates the tax season, and they take a reactive approach to pay tax, which doesn't serve anyone in any way. Understanding the process and planning is the best thing to do.
If you are hoping to save money by waiting until the last minute, think again. You are not helping yourself by waiting for the tax authorities to send you notifications. The property developers in Sri Lanka who take a proactive stance are offered tax reductions – something you must remember if you are considering John Keells Properties. Getting in touch with a professional might be the best thing to do but doing a bit of research on your own can help you comprehend the tax policies, and it makes for better planning, too.
Every investor should understand the tax filing system. This includes understanding the terminology and the filing method.
A CPA, a certified public accountant, can help you during the tax season. A qualified financial advisor can offer you a variety of services, including planning and acquisition. A real estate investor should work with a financial advisor who's specialised in real estate. They have the experience and qualifications to better understand your business. Hiring a CPA will cost you money, but that expense is nothing compared to the amount of money you can save by using their expertise.
You shouldn't limit your investment to one property. If you wish for a steady stream of income unaffected by depreciation deductions, you should consider investing in another property, especially if you have capital gains to spare. This is because capital gains are subjected to capital gains tax; to minimise the amount you have to pay as tax, you should invest that money.
Every investor should learn how to organise. If you are good at organising, everything else will fall into place, including your filing system. If you work from home, make sure there's a dedicated space for work, and it should be a place where you can focus on work and thrive as an investor.
As you get closer to the tax season, start differentiating between short-term and long-term investments. Rehabbing, flipping, and wholesaling fall under short-term and buy and hold properties fall under long term investments. Understanding the difference is important in order to determine the tax rates.
Real estate investors fail to calculate travel and entertainment costs, which is a mistake. You should include these costs when calculating the net income. Entertainment costs constitute hotel stays and the cost of holding client meetings and other events. Always keep a clear record of all these costs and benefit from the write-offs.
Many investors fail to do this. Tracking all your expenses is important if you don't want to pay off the bulk of your income as taxes. Keep clear records of all the expenses, including printing business cards, appraisal fees, advertising, insurance, and vehicle expenses. This might not seem crucial, but it will be very useful during the tax season.
In this age of digitisation, you don't need to go through stacks of files and paper to track down expenses. There are tools that can help you with bookkeeping; they allow you to categorise all your expenses and make notes if necessary. Using a digitised system can help you save a lot of money, time, and effort.
A true believer that the pen is a mighty weapon, ventures into reaching the minds of every reader with the earnest hope of leaving an indelible stream of thought.
A travel writer who has a pas...
