Why Depreciation Is a Big Deal for Investors
Peter kicks off the episode with a real-life story: he sold one of his properties and had to think deeply about taxes. That led him to today’s focus, depreciation.
He explains it simply: even though buildings gain value in real life, the IRS lets you write off part of your property’s value each year because it’s technically “wearing down.” This deduction doesn’t cost you anything extra and can lower the taxes you owe on passive income. For example, if $400,000 of your property is depreciable, you might deduct about $14,500 annually, just for owning it.
That paper loss can reduce the taxes you pay on rental income or distributions from syndications. And it’s just the beginning. Peter transitions into how physicians, especially those earning strong clinical income, can benefit even more from this strategy.
