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Tax Benefits of Leasing Real Estate; Something to Consider for Owners Waiting for the Market to Rebound

The Forbes Magazine articles regarding Real Estate that we referenced Monday also had a feature discussing the tax benefits of leasing real estate that many investors do not take into account. Forbes was careful to point out that the Tax Benefits should just “sweeten a deal” and not drive it. In other words, do not keep or buy an investment property with significant negative cash flow just for the tax benefits.

The tax benefits include the obvious deductions such as mortgage interest, HOA dues, property taxes, insurance fees and management fees, but they also include “depreciation”, and this can be significant. All buyers should, of course, consult their CPAs, but the tax benefits should not be ignored when real estate is purchased.

Forbes focused on a buyer who does not wish to sell her property now because she would incur a large loss. She can rent the property now while waiting for the market to rebound and almost break even (cover her mortgage and property taxes). But, when the tax benefits are added in, leasing out the property looks like a very smart decision.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167