During the January-April income tax season, it`s appropriate to review a book which emphasizes how to use real estate to shelter the owner`s income from other sources, such as job salary, interest and dividends, from taxation. Kau and Sirmans have updated their authoritative book to meet the need of investors who hate to pay taxes and want to learn how to legally avoid taxes. The authors say the book has two prime purposes: (1) To show the reader how taxes enter into real estate investment decisions and (2) to introduce the basic principals of real estate investment taxation. In other words, the book shows readers how to use real estate tax shelters to save income tax dollars.
The book is organized into four prime areas, how taxes influence realty investment decisions, ownership forms and their tax results, taxes during ownership, and tax consequences of property disposal. The final three chapters involve three case studies of a small triplex investment, a general partnership apartment investment, and a syndication of an office building.
Since the authors are college real estate professors, the book is logically aimed at two reader audiences, namely real estate investors and college realty students. Unfortunately, the result is the book takes on an excessively academic tone rather than one of practical usefulness. This means the book is big on theory and short on immediate application to the real world. Fortunately, the really ”tough stuff” such as present values and mortgage constant tables are mostly hidden away in the book`s appendix.
However, the excellent tables and layout design make the book quick reading for those who want to rapidly learn real estate taxation fundamentals. The chapters on how financing affects taxes and depreciation explanations are especially good. But the lay reader who is not a serious real estate student may have difficulty by getting bogged down in the over abundance of mathematical details.
Beginning real estate investors who want to know more about how realty can shelter their income from taxes will benefit from this book. However, the reader must wade through the excessive academic dribble. But the examples and complete analysis of investment decisions make the reading work worthwhile.
