The rent you are receiving is already income and you should be claiming it. Depreciation helps you offset that rental income and can even offset some of your regular income.
The catch with depreciation is that when you sell the property, the taxes that you removed by depreciation will be recaptured at your regular tax rate…
UNLESS you choose to sell your property using a 1031 exchange, by which method you can defer the taxes.
Fun, huh?
I think there’s a lot of reading you need to do. I recommend the following:
Order it now and learn the magic tax rule called “the real estate professional tax deduction.”
