When it comes to investing in real estate industry, investment in rental property is no doubt a solid investment. Buying investment property is a great way to achieve stability, reliable cash flow, preservation of principal and capital appreciation etc. That is the reason why so many investors prefer buying investment properties. However, in this booming property market, you can also find many such investors who are buying investment property but are unable to handle day-to-day issues of property management, and are earning very low cash return on equity in the real estate market. The reason is that they lack an effective planning. In fact, there is no guarantee if the current huge boom in buying investment properties will last long. Therefore, in order to gain more return for the investment in rental property, you must follow a proper investment property tax strategy. 

Advantages of a Proper Investment Property Tax Strategy
Let me explain how you can preserve your equity while you are buying investment properties. You benefit largely if you follow a proper investment property tax strategy.

Protection from Price Fluctuation
A proper strategy will protect your equity gain, which you can earn by buying investment properties from price fluctuations in the real estate market. 

Improve your speculative capacity 
If you follow a proper investment property tax strategy, you can improve your speculative capacity and increase the rate of return from your investment in the rental property. This way you can gain from two growth channels ¨C the stock market and appreciating house prices. 

Property Appreciation and Insurance
An effective investment property tax strategy, in a way, can also provide insurance to your investment properties. This insurance can work as a tax-free growth of your properties. On the other hand, property appreciation is a good thing but at the same time, it is a taxable growth. Hence, your tax strategy can easily convert your taxable growth into tax-free growth. Even if the housing boom ends, buying investment property will not prove a nightmare for you. This insurance will save you from any possible loss. No matter, if the stock market suffers a loss, with a careful planning and strategy, you will not lose anything at all. 

How to Make Your Investment Property Tax Strategy
The best way is to go for equity index insurance. Let me explain how it can help you preserve your equity gain. In fact, an equity index insurance policy is tied to a stock market index. This way, it insures you a double advantage. First, even if the market conditions are not in your favor, you do not have to worry about your investment in rental property, as this policy will protect you from any possible loss. In simple words, you will not lose a penny. Instead, you will gain more returns on equity for your investment in rental property because you get a tax-free growth of your money invested in the policy. Moreover, since an equity index insurance policy grows with the growth of stock market, as a policyholder, you also get a credit with a nominal growth for a particular year. The following information intends to give an overview of how to follow your strategy.

• When you are buying investment property, the first thing you need to do is to refinance your investment property with an interest only loan. 
• Take a certain portion of your equity gain out of your investment property. However, while deciding about that certain portion, keep in mind how much payment amount you can afford on your interest-only loan. 
• Invest that portion of your equity gain into an equity index insurance policy. 
• Now, even if the market price fluctuates, you will not suffer any loss because your equity gain is safe with that equity index insurance policy. 

Buying investment property can be a great way to build tremendous wealth, but if you do not have a careful planning and an effective strategy, it can also make you suffer huge losses, when market conditions are not in your favor. Therefore, if you are buying investment properties, it is always prudent for you to follow an effective investment property tax strategy that could not only protect your equity gains but that could also help you gain more return on equity on your investment property. Without a proper strategy, you can certainly amass wealth, but all of it will be at risk, and one crash in market can wash away everything.

 

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