Marginal vs. Effective Tax Rates: Why the Difference Matters for Real Estate Investors

Published about 2 months ago • 1 min read

Looking for a Cost Seg Study for your property?

Today’s topic: Marginal vs. Effective Tax Rates and why this distinction matters more than most realize.

A lot of people think that earning more means they’ll “get taxed on all of it.” That’s not how our tax system works — and believing that can lead to some costly decisions.

In this article, we break down:

The difference between marginal and effective tax rates
Why hitting a new tax bracket doesn’t raise your tax bill on everything
How to avoid letting taxes limit your income potential
How smart investors reduce their effective tax rate without slowing growth
Why cost segregation is one of the best tools to do exactly that
What this means in real-world dollar savings for rental property owners

"Your marginal tax rate is the highest rate you could pay. Your effective rate is what you actually pay — and it’s often much lower."

Check out the full article and see how this plays out for real estate investors:

Read the full article

Thank you for reading. Please reach out and let me know what resonated with you. I read every email!

Cheers,

Sean

CPA | Founder of Maven Cost Seg and Maven Equities

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References: https://www.therealestatecpa.com/blog/str-loophole-irs-audits-three-arguments-the-irs-is-making/

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