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- Mortgage Interest Deduction: Deduct the interest paid on your investment property’s mortgage, reducing your taxable income.
- Depreciation: Depreciate the property over 27.5 years, allowing you to deduct a portion of the property’s cost each year.
- Operating Expenses: Deduct expenses related to property management, maintenance, repairs, and utilities.
- Property Taxes: Deduct property taxes paid on your investment property.
- Capital Gains Tax: Benefit from lower capital gains tax rates when you sell the property after holding it for more than a year.
- 1031 Exchange: Defer capital gains taxes by reinvesting the proceeds from the sale of one investment property into another similar property.
Conclusion: Understanding the tax benefits of owning an investment property can help you maximize your returns and make informed investment decisions. Consult with a tax advisor to ensure you’re taking full advantage of these benefits.
