WHAT ARE THE TAX ADVANTAGES OF OWNING REAL ESTATE? IS NEGATIVE CASH FLOW TAX DEDUCTIBLE?
Sometimes a new investor might consider a property with a negative cash flow a poor investment. However, did you ask the question, is negative cash flow tax deductible? Yes! People often ask, what are the tax advantages of owning real estate. Even though a property could have a negative cash flow, at the end of the year it may be more profitable than you think.
- It’s a way to postpone your tax liability, and I say postpone because being realistic, you never just get out of your taxes, but it’s a good way to postpone if you’re making a fair amount of money in a given year. Having a real estate property gives you really large tax breaks so that you don’t have to pay those taxes in the given year. That’s a big reason.
- Another reason is real estate grows so quickly you just can’t go wrong. Let’s say you’re negative cash flowing a couple hundred a month. What’s that in a year? $2,400. Well do you really think that your property, after one solid year, is not going to appreciate by at least $2,400? So it’s the appreciation that some aren’t considering. It is not just the cash flow.
Cash flow or not, as long as your finances can accommodate the extra monthly investment, you really can’t go wrong with real estate!
