Who Form 1120 C Rental 2023-2024

What is depreciation for real estate investing? That's today's video. Let's dive in. Hey there, I'm Clayton Morris, the founder of Morris Invest. We're one of the largest turnkey rental providers in the country. Today, we're going to talk about depreciation, one of the all-important reasons we even invest in real estate in the first place. It's something that's so powerful that lets us keep more of our money in our pockets than sending it off to the federal government come tax time. So let's put this definition up on the screen. What is depreciation? Well, it's simply the reduction in the value of an asset over time due to wear and tear. Well, the government recognizes that things fall apart and if you have a great rental property you've rehabbed, in 27.5 years (those are the years, I don't know why they put that half in there, but that's what the government allows), that overtime 27.5 years, they believe that that property will basically fall to ruin, which doesn't happen because we actually don't lose the value of a home, really. I mean, when you compare it to the stock market, a stock can go down to zero, but rental property never ever goes to zero. Sure, in a down economy, you might see a little bit of a dip in property value, but over the long term, you're not going to see it ever go down to zero. It's frankly impossible. So 27.5 years is the amount of time that the federal government says your property will deteriorate. Now, what's great is that every year for 27.5 years, you get to claim on your taxes the depreciation of that property to offset your rental income. So let me give you a specific scenario, right? Let's say the value of the home...