Real Estate Investing has become common and popular among people in business. But there are
many hidden fees and costs compared to stocks and REITS and you don’t always get a return on
“Yields are too low to turn a profit”, “It’s not as tax efficient as I thought it would be”
In order not to fall into these traps, it is important to do your due diligence and to run financial simulations.
Here are some fees and costs associated with real estate investing:
Income Tax・Municipal Tax・Property Tax・City Planning Tax・Property Management Fees (if you hire a Property Manager) ・Sole Proprietorship Tax (if your business exceeds a certain amount and you are considered to be a Real Estate Lending Business) ・Advertising・Building Management Fees・Reserve Funds for Repair Fees・Renovation Fees ・Fire (Earthquake) Insurance, Fees paid to your Accountant, etc
That’s a lot of fees!
However, you can write many fees and expenses off as business expenses thereby saving money.
In addition, you can also write off certain expenses as depreciation expenses even though you haven’t
actually paid for them.
In order to minimize taxes, it is important to keep clear and accurate records of expenses and file a return
so that the tax office can process them.
It is important to maintain a fair balance between costs and tax savings. There is nothing to be afraid of
if you have knowledge and keep educating yourself.