Yes that's true, but while you're both getting tax benefits before you sell it and you're making money on the appreciating. So you get to "depreciate" an appreciating asset. Even after taxes, it's a win. Besides, the tenants are actually paying down the debt. Your only investment is whatever relatively small down payment you've made. Hopefully tenant rents are enough to pay for upkeep.
You don't pay cash for the real estate - you take advantage of leverage and at the most pay 20% out of pocket.
While you own the building, the income you make isn't taxed because you can claim depreciation against your income. If you take into account the time value of money, if you take the tax free money and invest that in another long term asset and sell it, then you pay the much lower capital gains tax.
You don't pay cash for the real estate - you take advantage of leverage and at the most pay 20% out of pocket.
While you own the building, the income you make isn't taxed because you can claim depreciation against your income. If you take into account the time value of money, if you take the tax free money and invest that in another long term asset and sell it, then you pay the much lower capital gains tax.