This is why Rich People Love Real Estate #taxes #financetips #financialfreedom

7 Jun 2023

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Wealthy investors love real estate because of depreciation, an IRS deduction that lets them write off the building's value as a paper loss. This can reduce their tax bill on rental income to nearly zero, even while the property appreciates and generates cash flow.

So rich people don't just love real estate, they love the tax benefits. Sure, they love the things like monthly cash flow, long term appreciation. All those things are great. But what they really love is the fact that you can take massive depreciation deductions. The IRS allows a huge tax deduction called depreciation. This can reduce or eliminate the tax liability on rental income. And the cool thing is, it's not even a real expense. It's just a paper deduction to help reduce your taxes. And in some cases, rich people are allowed to take an even bigger tax deduction, which allows them to pay zero tax on all of their income taxes.