TAX PLANNING FOR THE INVESTOR
Filed Under Tax · Tagged: investor, tax planning
Investments are usually found in 3 asset classes: Real Estate, Paper and Business. Each class has different tax considerations:
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REAL ESTATE: Usually income will be rental income (similar to business income) or Capital Gains. Remember only 50% of Capital Gains are taxed. The Capital Gain of selling your Personal Residence is exempt from taxes.
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PAPER: Usually paper investments such as bonds and other notes produce interest income. Interest income is taxed at the highest rate of all investment income. It is important to ensure that you are making a good rate of return on interest to make the after tax amounts worth it.
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BUSINESS: Usually business investment is in the form of Dividends and Capital Gains such as stocks purchased in a public company. Both Dividends and Capital Gains have preferential tax treatment.
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