The IDEAL Investment – Property Investing Depreciation

Property Investing Secrets: Depreciation

In my previous posts I started explaining why property investing is widely considered the IDEAL investment, IDEAL standning for the 5 main features of property investing that make it so attractive to investors worldwide.

In the last post I spoke if I for Income, today's post is about D for Depreciation.

A rental home is seen as a depreciable asset just like a car or piece of factory machinery. Rental properties with positive cash flow can show an accounting loss, granting the owner a tax deduction, or, as Robert Kiyosaki calls it, “Phantom Cash Flow”.

Depreciation is an accounting loss and only shows up on paper.

It can result in you being able to turn a small economic profit into a small tax loss. So, even though you could be “loosing” money on paper you could actually be making a monthly cash profit.

The building value (Purchase price - Land Value = Building Value) of residential property is usually depreciated over 27.5 years. Commercial property is usually depreciated over 39 years.

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