Tax strategy for paid off investment properties

[Carolyn Morales]

What should we expect tax season if we paid off investment property this year,  and how can we minimize the tax bill on the income of paid off rentals?

[Steve Vaughan]

I don't see how paying off your rentals is detrimental to your tax burden.  Opinions on the opportunity cost of the cash you used to pay it off aside, your tax position will BENEFIT.

I have 3 paid off places now and will have a 10-unit paid off in 2019.  Here's what it did on 1 house as an example.  I was paying $6,000 in interest per year.  That was resulting in a tax reduction/ rebate of about $1500.  

I was spending $6,000 to get back $1500.  That's the reality of the 'tax benefits' of mortgage interest.   Send me $6k and I will return $1500 to anyone any day.  Twice on Sunday.