Quote:
Originally Posted by anyonebutedmonton
Understood, but those interest payments that are deductible are real costs. As in, they are actually paid to the bank. They reduce net income because they actually flow out to third-party creditors.
The depreciation claimed would be in respect of depreciable assets, which would not include the land. I don’t see how the financing structure comes into play in this respect.
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My point about the financing had more to do with my earlier comment where I talked about someone taking $10 million of their money and buying real estate and then trying to reduce their tax burden.
In reality nobody starts with $10 million of their own money.
Basically I'm saying you have less income left to tax if you finance your real estate purchase. Which is perfectly fine. Debt financing is an entirely probable and ethical way of doing business, and many honest people and businesses have created jobs, paid taxes, etc that way.
What I don't understand is why someone can depreciate an asset on paper that actually increases in value over time.