The Depreciation Myth With Real Estate Investing

Fact: Depreciation is an expense that real estate investors can take to offset some of their income

In general the  annual expense is the purchase price (minus a few things) divided by 27.5 years.

In general the  annual expense is the purchase price (minus a few things) divided by 27.5 years.

Even if the home appreciates, you can still take a depreciation expense.

As a Chartered Financial Analyst with several decades experience investing in real estate I want to dispel a myth.

I've seen so many real estate "experts" give misinformed tips about depreciation.

It is a myth that depreciation is a tax free benefit.

When it's time to sell there is a "depreciation recapture" tax.

Depreciation Recapture is basically a capital gains tax recapturing all of the depreciation

Depreciation recapture exists and is applicable even if the investor never depreciated their real estate.

This tax hits close to home for us. We had to write a check to Uncle Sam this year that could have bought a house.

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