The race to limit tax liability for 2018 is on. The money moves that we make now will determine how much we owe in taxes for both 2017 and 2018. This has never been more important for New Yorkers, who now face an additional $1.5B in taxes this year.
Here are five ways you can work to lower your tax burden…
1. Downsize Your Home
With the new severe limitation on deducting property taxes, and state and local taxes, many may benefit from downsizing their homes. Finding a cheaper property, in a lower tax zone may be a smart move. If you’ve been thinking about moving to that retirement condo, or getting the kids out of the house to their own place this might be the time to do it.
2. Move Abroad
If you’ve been thinking about moving overseas for better weather, the lifestyle you crave, or for more affordable healthcare and cheaper living, this might also be the year to do it. Even if you stay out of the country for 6 months of the year, and generate your income from abroad, you may not have to pay federal income taxes in the US. Check with your CPA first though, as this can get complicated.
3. Make the Shift to Business & Investment Income
Setting up more of your income to come from investments of a business, rather than from earned income from a W2 job may also help. You can do this by starting a new business which can benefit from lower taxes under the new tax plan, or contributing the maximums to your 401k and IRA, and then choosing a self-directed plan. That could boost your tax deductions for this and next year.
4. Improve Your Investment Portfolio
Using tools like the 1031 exchange, you can expand and upgrade your real estate investments, and generate more income, and wealth, while deferring capital gains taxes.
5. Challenge Your Property Taxes
You have the right to appeal and challenge your property tax assessment and bills each year. This applies to your personal residence, and any second homes, vacation homes, and investment properties you may own.