Depreciation typically implies loss but in terms of Real Estate it actually can become a benefit to you. Steven takes you through the different types of depreciation and how you can use it to your advantage as the year comes to an end and tax season begins.
Please note that these are tips based on experience and you should seek the legal advice of your CPA first to see if you can take advantage of any of the tips shared.
- Depreciation allows a business or an individual to recover the costs of an investment over a set period of years. So when you're making an investment, you're able to recapture that investment that you made, back as depreciation.
- When you're investing in a piece of commercial property, depreciation will show up as a loss of money, however you didn't really lose money as you're able to have that as a write off that reduces your taxable income.
- The incentive of not paying taxes upfront, and deferring that to a future date, allows for a greater return, and ends up being a better choice overall.
- The practice of “buy until you die” can defer taxes indefinitely, even upon inheritance to your family.
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