Today seems like a good day to buy real estate, does it not? Think about it. Everyone is down on the idea, but rents are strong, there is a lot of demand for rental properties where people can live.

Remember how many people were living in a home before and have now been foreclosed upon, so these people are not likely to want to go back to renting an apartment. This trend, when combined with declining prices generally and low interest rates IF you can get financing, and the outlook for buying a single family home as a rental property looks pretty strong overall.

When you combine the potential tax benefits, buying real estate looks even stronger (albeit not perfect by any means).

Consider:

-- When you purchase a rental property, you can "depreciate" the value of the building, meaning take a deduction for the "asset's" declining each year. Over 27.5 years, then, you can take a deduction of the value of the house. This can create tax free income if, for example, you find a good renter and they keep the house nice, so that far from depreciating, the asset appreciates in value. Meanwhile the depreciation deduction is "canceling out" the rental income that you are enjoying tax free.

-- At some point, if the rents appreciate along with the value of the property, you will be able to borrow more money against the rental property, so long as your "rent rolls" are legitimate and the property is easily rentable, that is actually a pretty good asset for a bank to make a loan upon.

-- When thinking about tax benefits of owning real estate, you have to consider, too, the benefit of having more money to pay your taxes. Remember that a penny saved is a penny earned, so if you can get an extra $3,000-$5,000 of tax free rental income per year, that will go a long way towards paying your tax bill, no?

Be careful of course with buying

We will further explore these ideas in the upcoming Pronto seminar about the tax benefits of owning real estate. That event is scheduled for April 23, please email This e-mail address is being protected from spambots. You need JavaScript enabled to view it for details.