Reinvest my monthly rental income to avoid claiming it on taxes

[Merrill Delimont]

I have recently bought 1 property, and am in the process of buying the second one.  The first home collected rent December 1, and I earned 500 over what I owe.  My second property should make 700 each month.  

My plan is to save the income from the two homes and use that money to invest in the next homes.

I have heard, but have not seen it in writing, can you save the income and "reinvest" into the next homes without having to pay taxes on it?

Thanks,

Merrill  

[Brett Sorenson]

Merrill, I am a CPA. Ask away...

But yes... if at the end of the year you have 10,000 of income in excess of all cash expenses (principal doesn't count) you will then get one last deduction of depreciation and generally speaking that will be the taxable amount.

Sometimes if an investor has one property that is a home run and they know they will cashflow well and end up with a substantial tax burden at year end they buy a second property that "loses" money on paper to offset the taxable gains from first property etc.