Interested in your comments on rental props, so hope you don't mind if I add my two cents. I think both you and Tradelite are making wrong assumption that tax laws have changed or worsened the investment in real estate. AMT should not affect tax deductions/benefits for investment property. AMT affects the deductions on schedule A, and not the supplemental income on schedule E. You still get the same deductions, depreciation etc. regardless of whether you pay AMT. As far as I know, there have been no changes to the tax laws or rules that affect rental real estate for the last decade or so. It is true, however, that other tax law changes have made other forms of investment (e.g., dividend tax cut) more favorable, so the inherent tax benefits from real estate investment don't look as juicy. And as Tradelite pointed out, you can always do the musical chairs with your primary residence (perfectly legal), and get a $500k tax free sale every two years. I've got a slight problem in that I have two properties (coincidentally also in the DC area) that both have capital gains more than $500k, so moving back into them is not as good a tax break as I would have had under the old law (rollover a gain into a new property). Finally, I think DC is still a great place to invest in rental real estate; lots of young people with high incomes, shelter from recession, and little land to expand onto. The rental market has been decidedly soft this year, but usually rents are extremely strong so you can get cash flow as well as appreciation.
Doughboy |
