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Real Estate Investing Glossary

What Is Annual Depreciation Allowance?

An annual depreciation allowance refers to the deduction permitted by tax authorities for taxpayers to subtract from their taxable income regarding assets subject to depreciation. In the U.S. tax regulations, the Internal Revenue Service (IRS) authorizes homeowners and investors to diminish their tax liabilities for properties expected to lose value over time. This depreciation reflects […]

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What is Amortization in Real Estate?

In real estate transactions, securing financing is a critical step for investors, often involving loans that can run into hundreds of thousands of dollars or more. To manage these substantial financial commitments, understanding the concept of amortization is essential.  Amortization refers to the process of spreading out loan payments over time, encompassing both principal and

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A Comprehensive Guide to Acquisition Cost in Real Estate Investing

“Acquisition cost” or “the cost of acquisition” is a fundamental metric that plays a crucial role in the success of real estate investments.  Let’s explore the complexities of acquisition cost and its significance in real estate investing. What Is Acquisition Cost? Acquisition cost refers to the total cost incurred to acquire a property, encompassing various

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What Is an Accredited Investor?

An accredited investor refers to a person or a business organization possessing the legal rights to deal in unregistered securities, typically achieved by fulfilling specific criteria related to their income, net worth, asset volume, governance role, or professional background. The Securities and Exchange Commission (SEC) in the U.S. uses the term under Regulation D, designating

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What Is a 1031 Exchange?

A 1031 exchange — named after Section 1031 of the Internal Revenue Code — is a strategic financial maneuver that real estate investors use to defer paying capital gains taxes when they sell an investment property. This exchange, which has its roots in the Revenue Act of 1921, promotes steady investment in real estate, helping

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