Can someone explain the benefits of rental income tax savings?

[Douglas B.]

I've heard it said that business income is handled differently than traditional earned employee income. Can someone explain this in an example for me? For example, how is $10k of earned employee income taxed differently than the same amount of rent generated on an investment property? I haven't yet bought my first property but I'd like to understand this better before taking the plunge.

(Sub30kclub)

[Dave Toelkes]

The quick and dirty answer is, your personal income is taxed on the amount you are paid, then you pay your bills and other expenses with what is left over after taxes. With business income, you pay your business expenses with the amount you receive, then pay taxes on the amount left over.