Investment properties have tons of tax advantages.
By Nicole Rueth - April 24, 2019
Tax advantages might have been muted for primary homes.. but they are still in abundance for investment properties! Let's start with Schedule E which is a gold mine! You can deduct all the costs associated with the property as well as a portion of your home and mileage if you manage the property... PLUS.. the phantom expense called Depreciation. I love this one as a lender since I can add it back when I qualify you.
When you sell this investment you will have capital gains and a recapture of the depreciation. However, with the use of a 1031 Exchange.. you can keep kicking that can down the road right up until you either die and give those properties to your kids OR... even better.. buy an investment home which you then, after a year, convert to your retirement home.. brilliant!
Lastly.. have you heard of Opportunity Zones??.. you should. Yet another tax benefit opportunity.
Knowing your tax advantages is key to making the most of your investment strategy.