What Tax knowledge do you wish you'd know before you started?

Land Investing
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If you’ve seen my other posts, you know I’m new and haven’t acquired any parcels yet. What tax info/setup should I get done now before things start heating up? Or if there’s an existing thread that I’m missing please let me know :slight_smile:

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@land_master

Learn and know the difference between cash accounting and accrual accounting.

Doing so will help you get your money off your mind…

Essentially, accrued money is counted before it’s transacted…which lets you see where your cashflow is headed before it gets there.

https://quickbooks.intuit.com/r/bookkeeping/cash-vs-accrual-accounting-whats-best-small-business/

So from every transaction, you may have an end of year tax bill on the gains…accrue those costs at the time of transaction, so at the time of the tax bill coming due, you’ve already got the money set aside.

Good luck.

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@land_master some people look at vacant land as a type of real estate that has no tax advantages, but there are definitely some “angles” you can use if you plan ahead (and in some cases, the tax advantage is better than any other type of real estate).

  1. This is one example of where residential land comes out ahead of every other type of property in a seller finance scenario.

  2. This is another example where you can write off a lot of value if you have a property you can’t otherwise sell (and assuming you can find a non-profit that will take it).

  3. If you’re willing to jump through a few extra hoops and not touch your profits until you’re 59.5 years old, this is another way you can not pay any taxes on the profits you make from your land deals.

  4. You can also avoid some taxes if you do deals in states with no state income tax.

Just some ideas to chew on.

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