tax shelter

Definition

An investment strategy using real estate's depreciation deductions and other tax benefits to reduce taxable income. It's completely legal alchemy that turns rental properties into write-offs.

Example Usage

The real estate attorney explained how the commercial building would serve as a tax shelter, offsetting income through accelerated depreciation.

Origin

Tax planning term that became prominent with real estate during 1960s-70s tax code provisions

Fun Fact

The Tax Reform Act of 1986 severely limited real estate tax shelters, ending an era where doctors and dentists bought apartments purely for losses.

Source: Tax planning and real estate investment terminology

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