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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (172718)	7/28/2003 9:17:37 AM
From: i-node	Read Replies (1) \| Respond to of 1575426

That is probably the coolest part of owning real estate that you can rent; you can take a passive loss against ordinary income(limited), while having a very positive cash flow. HEAVILY limited. In fact, the wealthy don't get that benefit at all -- the passive activity provisions specifically limit the deduction of rental losses against ordinary income to a very small (insignficant, for the wealthy) amount. Furthermore, with the current depreciation guidelines, many if not most rental properties do not generate losses in the first place. And certainly not at the level with pre-TRA86 depreciation allowed. From a common sense perspective, it doesn't make much sense to depreciate something that is increasing in value by 5% to 10% per year, does it? While real estate often goes up in value, it certainly CAN and DOES go down in value as well. You can't logically integrate market values into the computation. Structures on a piece of real property ARE, over time, wasting assets, and as such, should be depreciated. It is a business expense and SHOULD generate tax deductions.

To: Road Walker who wrote (172718)	7/28/2003 5:01:50 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 1575426

RE:"From a common sense perspective, it doesn't make much sense to depreciate something that is increasing in value by 5% to 10% per year, does it?" Nope, just another perk for RE. These perks were intended to make it easier for people to find housing, either rental or purchase. Along with it it spurred prices to climb to about 50% over GNP. How this helps first time buyers is beyond me. As for Rentals, they are relatively dead compared to sales. With all the easy money out there people have been buying not renting. You're lucky to get 1/2 or 2/3s in rent vs payments of buying. Of course this is cyclical and usually corrects.