INVEST IN RESIDENTIAL INCOME PROPERTY
INVEST IN RESIDENTIAL INCOME PROPERTY
DEPRECIATION
Talk to your accountant. Depreciation can be your new
best friend. The beauty of it is that while your house is actually
appreciating (going up) in value, the government is allowing you to have a tax
benefit, because the "life" of the improvements is said to be 27.5 years.
It's similar to depreciating office equipment or a car!
Let's say you bought a
$200,000 income property. If $20,000 is the value of the land, then the
house/improvement value is $180,000. When that $180,000 is depreciated
over 27.5 years, you can take $6500 straight off your income (but talk to your
accountant - the government has caps on how much depreciation you can deduct
from your income).
If you buy a $150,000 property, and the land value is $50,000, you would depreciate the $100,000 cost of improvements over 27.5 years. $100,000 / 27.5 = $3636 would be your write off.
There are caps to how much depreciation you can deduct from your income (again, I defer to your accountant), but I believe the cap is somewhere around $25,000 off your income if you earn $100,000.
NOTE: You CAN
depreciate you proportional share of a Tenant in Common investment.
Where to invest
- Right now, we HIGHLY recommend Austin, Texas
(not Dallas, not Houston...)
Buying a new home from the builder
Tenants
Property Management
Never pay capital gains tax - 1031 Exchanges
Depreciation is your friend
Leveraging your money (it's a beautiful
thing!)
Tenants in common -
TIC Investments
Excel Spreadsheet
Investment Property Analysis worksheet
(note: you must have Excel on your computer to open this)
When To Sell
Miscellaneous - And
recent remarks by Suze Orman