Copyright 2014

Trump's tax bill: Smaller than you think?

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Category: Money and Finances Published: Wednesday, 22 June 2016 Written by Admin
Private real estate investors can write off depreciation costs even when the vast majority of their project is debt-financed. What does this mean? Lets say a private real estate developer builds a rental property that costs $100 million, but he only puts down 10 percent or $10 million of his own money, and finances the remaining $90 million with a 5 percent loan from a bank or investors. Then, lets suppose the annual rent payments minus expenses for maintenance generate $5 million a year before interest. Annual interest on the property would be $4.5 million, leaving a net cash flow of $0.5 million.

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