Those who buy rentals for investment have three strategies.
Income
Tax savings
Capital gains
long term
Short term
Those who invest for income generally won’t buy tax losses. If they have a tax loss in the beginning, within a few years most of their income is sheltered but they still want, seek and plan for generated income after taxes.
Those investing in the tax loss category are looking to shelter other tax gains in unearned income including capital gains taxes on other assets.
Capital gain investors are looking to maximize the write offs even with negative cash flows to carry forward tax losses. They use these for when the property (or other properties) is/are improved or appreciates to where it can be sold and the gains are mostly tax free.
when you buy a property to live in, you lack a strategy, because all your requirements are for your use. You lack a strategy for the purpose of the investment and hope for the best.
the lack of a strategy/plan can result in really bad results. Such as when you have equity in the property, once time expires on your primary residence (500k couple 250k single) your former home equity becomes taxable without the very generous tax free income benefits.
i personally have had many rentals and in retirement I’ve kept two. One that after all expenses generates a sizable income and taxable income and the other provides a lesser income with net tax losses to shelter the others income. In time the depreciation will run out, then my carry forward losses will shelter both incomes for a few more years. After that, I make more and will pay more in taxes, but I hope not to be driooling in my bib then.
So the final status for those of us who maintain rental property for retirement income is to have investments that increase income with the cost of living (most times better). Increases in value and provides decent housing to others.
Don’t get hung up on the word loss, always plan your investments, and invest in your plan. It’s like SCUBA diving, you must plan your dive, and dive your plan. Or, you might die, in real estate you will most probably loose money and/or ruin your credit too.
