Quote:
Originally Posted by Papa_lecki
Don’t forget, if the property is set up as an investment, you get to depreciate it on your tax return, so any gain will most likely be offset by the depreciation loss. And all those expenses (amenity, taxes, utility) are also expenses. So your 20% gain when you sell in a year or two is basically tax free.
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Not exactly. When you claim annual depreciation deductions, you reduce your taxes while the property is an investment property. But, when you sell the property, the depreciation deductions are "recaptured" and you pay taxes on them. So, the depreciation is not tax free, it is only tax deferred. In order to claim the house as an investment property, it has to actually be available for rent.