“It's important to note that tax laws and regulations are complex and subject to change, so it's advisable to consult with a qualified tax professional or accountant who specializes in real estate taxation to fully understand the tax implications of your investment decisions.”

Investing in real estate can provide several tax benefits that can help individuals reduce their tax liability. Here are some ways real estate investment can impact personal taxes:

1. Depreciation: One of the most significant tax benefits of owning real estate is depreciation. The IRS allows investors to depreciate the cost of a residential property over 27.5 years and a commercial property over 39 years. This depreciation expense can be deducted from rental income, reducing taxable income.

2. Mortgage Interest Deduction: If you have a mortgage on your investment property, you can deduct the interest paid on that mortgage from your taxable income. This deduction can significantly reduce your tax liability, especially in the early years of the mortgage when most of the payments go toward interest.

3. Property Tax Deduction: Property taxes paid on real estate investments are generally tax-deductible. Investors can deduct these expenses from their taxable income, reducing the overall tax burden.

4. Capital Gains Tax Treatment: When you sell a real estate investment for a profit, the capital gains tax rate may be lower than the ordinary income tax rate, depending on how long you've held the property. If you've owned the property for more than a year, you may qualify for long-term capital gains tax rates, which are typically lower than short-term rates.

5. 1031 Exchange: Investors can defer capital gains taxes by utilizing a 1031 exchange, which allows them to sell one property and reinvest the proceeds into another "like-kind" property without recognizing the gains for tax purposes. This strategy can help investors defer taxes and continue growing their real estate portfolio.

6. Pass-Through Entity Deduction: If you own real estate through a pass-through entity such as a partnership, LLC, or S corporation, you may be eligible for the qualified business income (QBI) deduction. This deduction allows eligible taxpayers to deduct up to 20% of their qualified business income from their taxable income, reducing their overall tax liability.

7. Tax-Deferred Retirement Accounts: Some retirement accounts, such as self-directed IRAs or Solo 401(k)s, allow individuals to invest in real estate. Income generated from real estate investments held within these accounts can grow tax-deferred or tax-free, depending on the account type, providing long-term tax advantages for retirement planning.

It's important to note that tax laws and regulations are complex and subject to change, so it's advisable to consult with a qualified tax professional or accountant who specializes in real estate taxation to fully understand the tax implications of your investment decisions.