Jen Dantas
Orlando real estate broker specializing in the Central Florida real estate market.
Understand how depreciation works
Let me tell you a quick story about a client of mine, Mariana. She bought her first rental property and was thrilled. After a few months, she saw the money rolling in and thought: “É isso! Estou construindo riqueza!”.
But then, fear hit. She called me, a little panicked, and said:
“Estou vendo esse lucro, mas e o imposto sobre tudo isso? Vou ter que entregar uma fatia enorme para o governo?”
Eu sorri do outro lado da linha, porque sabia que estava prestes a apresentar à Mariana o que eu chamo de “superpoder” do investidor imobiliário. It's a concept that, at first glance, seems complicated, but is actually the most powerful tool we have to legally reduce (or even eliminate) our taxes.
This superpower is called depreciationAnd if you, like Mariana, are profiting from real estate but worried about taxes, pull up a chair. I'll explain this to you in a way even a 10-year-old could understand.
What is depreciation, anyway? Think about a work truck.
Imagine you buy a brand-new pickup truck for $50,000 to use in your business. You and the government know that in five years, that pickup truck won't be worth $50,000 anymore. It will have scratches, the engine will be more worn, the tires will be bald. It will wore out.
The IRS understands this and tells you:
“Olha, como essa picape é um ativo do seu negócio e está se desgastando, vou deixar você deduzir uma parte do valor dela como uma despesa a cada ano.”
Now, apply this same logic to a property.
Quando você compra uma casa ou um apartamento, o terreno em si não se desgasta. Mas e a construção? O telhado envelhece, o encanamento se deteriora, a pintura descasca, a estrutura sofre com o tempo. A construção, assim como a picape, está se “desgastando”.
Depreciation is simply the tax recognition of this wear and tear. It is a expense on paper. Ninguém te manda uma conta por isso. Nenhum dinheiro sai do seu bolso. É uma dedução “no papel” que o governo te permite usar para reduzir seu lucro tributável. É por isso que é um superpoder.
How the magic happens in practice: A simple example
Let's use round numbers to make it easier.
Let's say you bought a property for US$ 300,000. The appraiser says the land is worth US$ 25,000 and the construction is worth US$ 275,000.
Remember, you can only depreciate the building, not the land. For residential properties, the government gives you a magic number: 27.5 years old — é o tempo de “vida útil” fiscal da sua propriedade.
- Construction Value: US$ 275,000
- Divided by: 27.5 years old
- Your Annual Depreciation Deduction: US$ 10,000
Now comes the amazing part. Let's say that, after paying all expenses (financing, property tax, insurance), your property generated a profit of US$ 8,000 in the year.
When filing your taxes, you will do this:
- Real Profit (Cash Flow): + US$ 8,000
- Depreciation Deduction: – US$ 10,000
- Taxable Income: – US$ 2,000 (a loss on paper!)
That's right. You put US$ 8,000 no bolso, mas para a Receita você teve um “prejuízo” de US$ 2,000.
Result?
Você não paga um centavo de imposto sobre aquele lucro. Se você tiver um emprego com salário, essa “perda” ainda pode ser usada para reduzir o imposto que você paga sobre ele.
Leveling Up: Cost Segregation and Bonus Depreciation
Ready for the next level of superpower?
The 27.5-year rule is a simplification. We know that the carpet in an apartment doesn't last 27.5 years. Nor does the refrigerator. Nor do the blinds.
This is where the Cost Segregation. É como contratar um especialista para “desmontar” sua propriedade no papel e colocar cada peça em baldes de tempo diferentes.
- 5-year bucket: Carpets, appliances, blinds.
- 15 year old bucket: Land improvements such as fences, sidewalks, and landscaping.
- 27.5 year old bucket: The main structure of the building.
THE Bonus Depreciation is the turbocharger of this process. It allows you to take everything in the 5- and 15-year buckets and deduct 100% of the value in the first year.
Returning to our example of US$ 275,000, let's say that cost segregation finds US$ 50,000 on 5- and 15-year items. With the bonus depreciation of 100 %, your Year 1 deduction jumps to over US$ 58,000! This creates a massive paper loss, giving you immense tax-saving power.
A Palavra de Cautela: A “Recaptura” da Depreciação
Every superhero has his kryptonite. The depreciation one is called Depreciation Recapture.
É simples: quando você vende o imóvel, o governo basicamente diz: “Ei, lembra de todo aquele desconto fiscal que eu te dei pelo ‘desgaste’ do seu prédio? Agora que você está vendendo com lucro, eu quero uma parte desse desconto de volta.”
This portion is taxed at a maximum rate of 25% (slightly higher than the long-term capital gains rate). It's the price to pay for the benefit. The good news? There are strategies, such as 1031 Exchange, which allow you to defer payment of this recapture indefinitely by rolling your earnings over to a new property.
Putting It All Together
A depreciação não é uma brecha ou um “jeitinho”. É uma parte fundamental e legal do código tributário, projetada para incentivar investidores como você e eu a fornecer moradia e melhorar propriedades.
This is why real estate investing is one of the most effective wealth-building tools available. It allows you to earn cash flow while, on paper, appearing to be losing money, shielding your hard-earned profits from taxes.
A Mariana? Hoje ela entende o poder da depreciação. Ela não só continua investindo, como faz isso de forma mais inteligente, usando esse “superpoder” para acelerar sua jornada rumo à liberdade financeira.
And you can too.
Read also: A One Big Beatiful Bill foi aprovada – entenda como isso beneficia os investidores imobiliários.
Legal Notice: This article is for informational and educational purposes only and should not be construed as tax or financial advice. Tax laws are complex and constantly changing. Always consult a qualified professional, such as a CPA or tax attorney, to discuss your specific situation before making any investment decisions.
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Buying a property in the US can be challenging, but Jen Dantas, as an expert Brazilian real estate agent, simplifies the process and will take care of everything you need to buy a property in Florida:
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- Prequalification and financing: Jen offers comprehensive financing support, with financial partners that serve international clients.
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- Documentation and support: From document review to contract closing, Jen and her team ensure every step is compliant with US law.
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- After-sales support: Jen's commitment goes beyond the purchase. She offers after-sales support, helping with administration, leasing, and other customer needs.
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