Tax benefits of investing in a multifamily property:

• Depreciation: Multifamily depreciation refers to the process of deducting the cost of a multi-unit property, such as an apartment building or condominium complex, over a period of time for tax purposes. This is known as depreciating the property. The IRS has specific rules for depreciating multifamily properties, which generally require using a 27.5-year recovery period and the Modified Accelerated Cost Recovery System (MACRS) method.

• Interest deductions: The interest paid on a mortgage for a rental property is tax-deductible.

• Operating expenses: Landlords can deduct a wide range of operating expenses, including maintenance, repairs, insurance, and property management fees.

• Passive income: Income from rental properties is considered passive income, which may be taxed at a lower rate than earned income.

• 1031 exchange: If an investor chooses to sell a multifamily property, they may be able to defer paying capital gains taxes by using a 1031 exchange to purchase a similar property.

It is important to consult a tax professional for guidance on how these benefits may apply to your specific situation. This is not tax advise.