|Posted: March 19, 2009, 8:26 pm - IP Logged|
Actually, if you buy investment real estate property, like rent houses or strip centers, ordinarily you can write off the cost of that property (called depreciation) over the life of the property - 31.5 years is the last number I remember hearing. Some property can be written off directly through what the IRS calls a section 179, but I am not clear on whether it applies to real estate.
You have to consider, too, that if you are buying this property as investment property, you will need expenses to offset the income earned from that property. Many times you can have positive cash flow, but negative taxable income on rental property mostly because of depreciation. Thus the appeal of real estate investment. The down side is that when you sell that property later, you have to "recapture" the depreciation through the tax on the gain on the sale - assuming you have a gain - something that is no longer a guarantee these days.