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934: How to Pay Less Taxes by Buying Real Estate (1 Write-Off You’re Overlooking) w/Brandon Hall
BiggerPockets Real Estate Podcast
Understanding Partial Asset Dispositions
Partial asset dispositions involve writing off the cost of an asset that has been removed from a property, ensuring accurate depreciation calculations. If a property component like a roof is replaced before fully depreciated, it's crucial to write off the remaining value to avoid over-depreciation. By recognizing the discrepancy between old and new assets, investors can optimize their balance sheet and avoid depreciation recapture upon selling the property. While depreciation can reduce taxable income, it is important to remember that it is a tax deferral, not an elimination of tax. Failing to write off removed assets can lead to increased tax burdens upon sale.
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