Tax Advantages in real estate
I hear people often say that real estate is treated more advantageously from a tax perspective than other businesses. I frequently hear people say something along the lines of "I get 15% rate of return, and that's not even considering my tax deduction so I know I'm making a killing". However, I don't see how real estate is treated any differently than other businesses. In business, profits are taxed, not income. My profit on a rental property is my income (rent) minus my expenses (Interest on my debt, insurance, repairs, etc.) and that is precisely what I am taxed on and I am taxed at the same rate as every other business. Some people might argue that depreciation on the house is a great benefit, but I don't see that either. Although I do not have to repair my roof every year, I have to save money for that expense every year, so I don't really consider that profit, so the IRS allows me to deduct some amount of money for that, great. Except that it goes against my cost basis and I get taxed on it when I sell the house. I'm not saying that it's unfair, but I certainly don't see why people consider it to be a bigger tax benefit that any other business. Am I missing something?