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8 Real Estate Tax Advantages of an Investment Property

An income property can range from commercial to residential and is bought or developed for the purpose of earning profit through renting, leasing, or price appreciation.

1. Depreciation (non-cash expense) deduction from income. This real estate tax deduction is based on the perceived decrease in the value of the real estate.

2. Mortgage interest tax deductions from income. A mortgage interest tax deduction is the interest you took for your mortgage loan and this real estate tax deduction is usually your biggest one. Also, remember to deduct your mortgage insurance premium if you took one out.

3. Deferral of capital gains via 1031 exchange


4. Cost of repairs, maintenance, and upkeep

5. Cost of services (rental property management & legal consultation or services)

6. Utilities

7. Travel costs associated with the property (checking on the property, inspection, repairs, etc). You can even deduct real estate taxes for the gas you used on your rental property visits.

8.Property tax deductions

Further tax advantages can be found in the way you choose to own the income property. While you should consult a tax professional first, it may be more beneficial to own the income property through an LLC, instead of in your own name.

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