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Tax Benefits of Owning Investment Property

Real estate investing isn’t just about rental income and appreciation—it also offers valuable tax benefits that can significantly increase your overall returns. Understanding these advantages can help you maximize profits and plan smarter as a property owner.


Here are the key tax benefits of owning an investment property in 2025:


🏠 1. Deductible Expenses

Property owners can deduct ordinary and necessary expenses related to managing and maintaining their rental.

Examples include:

  • Mortgage interest

  • Property taxes

  • Insurance premiums

  • Property management fees

  • Repairs and maintenance

  • Utilities (if paid by the landlord)


📉 2. Depreciation

Even if your property appreciates in value, the IRS allows you to depreciate the cost of the building over 27.5 years. This paper expense reduces your taxable income without reducing cash flow.


🧾 3. Pass-Through Tax Deductions

If you own property as a sole proprietor, partnership, or LLC, you may qualify for the 20% Qualified Business Income (QBI) deduction, lowering your overall tax burden.


🔄 4. Capital Gains Advantages

  • Long-Term Capital Gains Rates: If you sell after owning for more than a year, profits are taxed at favorable long-term rates.

  • 1031 Exchange: You can defer paying capital gains taxes by reinvesting the proceeds into

    another property.


🏦 5. Deductible Loan Interest

The interest portion of your mortgage payment is tax-deductible, which can be significant in the early years of ownership.


📉 6. Potential Loss Offsets

In some cases, investors can use real estate losses to offset other income, reducing overall taxable income (subject to IRS limits and qualifications).


✅ Final Thoughts

Owning investment property can be a powerful wealth-building strategy—not just for cash flow and appreciation, but also for its generous tax benefits.


Always consult with a tax professional to ensure you’re taking full advantage of all available deductions and structuring your investments in the most tax-efficient way.


Your NorCal Realtor

M&M Real Estate

BRE Lic# 01938720

Cell: Call/Text 707-330-2324


About Scott Sweeney


SweeneySells

Full Time Realtor 13 Years +

Over 100 Families Served

Top 5% Producing Agent

Buying & Listing Specialist

Contract & Negotiation Ninja

CSUS Business & Marketing Graduate 2006


With quickly serving over a 100 families, Scott Sweeney has become a top 5% producing Realtor in the greater Sacramento area who has helped clients from the Bay Area to South Lake Tahoe. Scott has a Bachelor Of Science in Business Administration, with a concentration in Marketing from CSUS. His education, and extensive background in the hospitality, marketing, and real estate industries, have helped Scott to become one of the leading, and most sought after agents in the area.


Reach out to SweeneySells today, and take the first step towards your real estate goals!

📞707-330-2324




Top Producer 2016-2023


"I appreciate your business & referrals!"


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