Why buy real estate if you're already in a high tax bracket?

By George E. Dube
I am often asked the question: “Why should I buy real estate if I’m already in a high tax bracket?”
At the risk of sounding like a smart aleck – why the heck not?
Yes, if you’re in a higher tax bracket you will pay more taxes than someone who earns less. But, surely you don’t want to switch places with someone in a lower tax bracket who earns less income?  And, if you plan your overall financial situation with a tax accountant who truly understands real estate, it may be possible to save some taxes for you and family.  This is particularly true for the business owner, doctor or other professional who can incorporate their business, or a family with a lower income taxpayer, such as a spouse, parent or child, with whom you can income split.
A common misconception is that the taxes are so high, that earning the extra income is hardly worth the effort.  I’m not trying to argue that taxes are too low on investment income from real estate, but even in a worst-case scenario, you’re still earning more income than you’re paying in taxes.
The alternative, Id suggest, is that you either put your hard earned money under your mattress or make the decision to “invest” in something that loses money and thus generates a tax deduction, or requires a government subsidy to make the investment attractive.
Ultimately, if you invest, whether in real estate, some stock-based investment, hulahoop factories, or whatever turns your crank, you’re going to pay taxes if you make money.  So, you’re simply deciding what makes the most sense to invest in.
Don’t be scared to make money just because of taxes.
You should worry about the investments and consider the advice of your investment advisor.  Let your tax accountant help you mitigate the taxes.
Source: New Home Guide
 

Original article: The Province
Read original aricle here.