The reason why rental property is considered such a good tax shelter
is because you can re****t a loss even though you are making a profit.
This is possible through depreciation.
Say you collect $12k rent and paid $8k in expenses - you would have to
claim $4k in rental income on top of your regular income... but after
a $6k depreciation deduction (typical for property worth $165k), you
can claim a $2k loss while still making a $4k profit.
Many times there are other factors you need to take into account, like
depreciation recapture and passive activity limits.
To learn more about Depreciation and how it affects your properties,
there is a detailed explanation at RealTaxtips.com (
http://www.realtaxtips.com
) You can keep more money in your pockets by taking full advantage of
your depreciation deduction.
Niman Singh
Community Relations Director
TReXGlobal.com ( http://www.trexglobal.com
)
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