Depreciation
Depreciation settles the matter. If passive income is what you’re after, then the upside that depreciation offers on oceanfront condos, tips the scale and makes residential real estate the best way to generate passive income, but don’t forget, it also can reduce your overall tax burden.
Depreciation is one of the most important reasons to invest in Oceanfront Condos. It helps you keep your money rather than pay out unnecessary taxes.
Depreciation is when you reduce the value of your oceanfront condo over time due to deterioration, or use.
The government allows you to depreciate your oceanfront condo over the course of 27.5 years, under the assumption that the property will have lost its value by that time, even though it doesn’t necessarily lose its value.
The Stock Market simply doesn’t have this upside. Even when the Stock market drops to zero, real estate never drops to zero.
Over 27.5 years, you can claim depreciation to offset the rental income your oceanfront condo produces.
If your oceanfront condo appraises for $200,000 then divide $200,000 by 27.5 years and you’ll arrive at $7,272.72, which is the amount you can claim on your taxes annually for the depreciation of that asset.
If your oceanfront condo rents at $30,000 each year, you can deduct the $7,272.72 from your taxable income for that property. So, you’ll only have to pay taxes on $22,727.28.
But What’s Cost Segregation?
Rather than depreciating the oceanfront condo as a whole, you can depreciate specific sections of the house like the cabinets or certain sections of the unit.
However, you must hire an accountant to perform the cost segregation study. If you have multiple oceanfront condos, this could be very advantageous for you.
Source: Redacted (YouTube News Channel)