The Tax Benefits of Section 8 Real Estate Investing

Real estate is one of the most tax-advantaged investments in the world, and Section 8 is no exception. By using the tax code to your advantage, you can significantly increase your actual take-home pay.

The Power of Depreciation

Depreciation allows you to deduct the value of the building over 27.5 years. This is a "paper loss" that reduces your taxable income, even if the property is actually putting thousands of dollars in your pocket every month. It is one of the few ways to legally make money and show a loss to the IRS simultaneously.

1031 Exchanges for Scaling

When you are ready to sell a property that has increased in value, a 1031 exchange allows you to defer your capital gains taxes. You can take all of your profit and reinvest it into a larger property, essentially using the government's tax money as an interest-free loan to grow your portfolio.

Opportunity Zones and Incentives

Many affordable housing properties are located in designated Opportunity Zones. Investing in these areas can lead to massive tax breaks, including the potential for zero capital gains tax on the appreciation of the investment if it is held for ten years.

Deducting Operating Expenses

Every expense related to your rental business is deductible. This includes property management fees, travel costs to visit your properties, mortgage interest, and even the software you use to manage your books. Working with a CPA who understands the specific needs of real estate investors is the best way to ensure you are not leaving money on the table.