HIDDEN INVESTMENT BENEFITS

Most investors look at the cash received after all expenses are paid to see if the benefits are worth investing in property. There are benefits besides just the cash that are hidden to an investment that need to be considered. To calculate the total benefit, investors should consider and calculate the following:

BENEFIT 1: Tax Benefits From Depreciation: Depreciation allowances are not taxable and may be increased and accelerated through increment depreciation schedules on times that have a shorter life schedule than the typical items.

BENEFIT 2: Interest Deduction: Interest is deductible and in effect will reduce taxable income.

BENEFIT 3: Principal Deduction: As payments are made, a portion of the payment is allocated to principal reduction and increases the equity as the mortgage is reduced.

BENEFIT 4: Appreciation: Historically, over long periods, some peaks and valleys, real estate has always increased in value generating higher net worth.