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Tax Benefits of Real Estate Investing

by on May 29, 2008 in Real Estate Investing

There are all kinds of Real Estate Investments: Apartments, single family homes, office buildings, shopping centers etc.

All of these offer big tax incentives for the real estate investor!

The IRS REQUIRES real estate  investors to depreciate their investment properties.
Depreciation is a “paper loss” required for estimated wear, tear and obsolescence. However, land value is not depreciable. This applies to 100% of the money invested in buying vacant land and that part of the property value apportioned to land on an improved property. (That is, land with a building on it).
Condominiums do not have a land element and 100% of the purchase price can be depreciated.

 

Residential income property is depreciated over 27.5 years on a straight-line basis.

 

Commercial property is depreciated over 39 years, also on a straight-line basis.

 

Dale Black          dale@blackandassociatesllc.com

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