marquee moon
Banhammer'd
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- Mar 10, 2011
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"The law assumes that buildings’ values decline every year when, in reality, they often gain value. Its enormous flexibility allows real estate investors to determine their own tax bills."
I'm all for addressing this in tax reform.
Not sure the exact mechanism at play and how much they can claim depreciation, however, they will eventually have to pay the taxes when they sell.
If you build million dollar building, make 100K/year in rent and depreciate 100k/year in rent and pay no taxes because you technically made no money, then at the end of 10 years when you sell that building you have to pay income tax on the sell price since you already took depreciation
If only there were some other way to profit off of ownership besides sales.
It takes money to make money
And if the building is not sold and instead passed on via inheritance?
If its sold then you're paying taxes, if it's not sold you can't depreciate it any further and youre paying taxes.
The article is a bit misleading by saying a building appreciates, thats largely false. They depreciate just like anything else, what generally appreciates is land. A new house is worth much more than the 30 year old house next door.
This seems like it might be true in most markets, but I can’t imagine it being true in New York. Is it?