Tfork

Depreciation is just a delay in taxes...it must be re-captured when you sell, then the capital gains kick in with a vengeance unless you do an exchange ad infinitum. Just speaking from small experience.

OOfff

Yep. it swallowed up my whole retro pay check last time

gloopy

Lots of big ballers like Buffett are hoarding cash right now despite growing inflation. I believe he once said "You pay a very high price in the stock market for a cheery consensus." The logic being its better to lose out on the often statistically out of context "8% a year including the great depression blah blah blah" boilerplate logic in order to position into life changing growth during "blood on the streets" fire sales.

The overall market is radically distorted and flush with malinvestment right now IMO. More and more big players are unloading their bags into the frothy retail euphoria. Not that long ago those calling for targeted inflation then broad stagflation then devistating deflation then nation changing hyperinflation were essentric think tank outsiders. Now the actual moves more and more traditional deep pockets are starting to make seem to be aligning with that macro.

Interesting times for sure.

Gunfighter

I much prefer LTCG and Depreciation Recapture (on 1250 property) than paying income tax. You get to delay the payment of taxes for years or even decades, which provides time value of money. In addition for investors in the 37% tax bracket, you get a 1/3 discount on the amount of taxes you eventually do pay. Using the example of a $100,000 depreciation deduction, you will be paying $25,000 of depreciation recapture upon sale of the asset. Without depreciation, you pay $37,000 of income tax today. OBTW, the IRS assumes you depreciated the asset in accordance with the applicable schedule and expects payment of depreciation recapture, even if you didn't claim the deduction.

People often misrepresent depreciation by acting like it is "free money". The more realistic characterization is an interest free loan that discounts the principal balance upon repayment.

Trip7

I'm thinking Jan 3rd 2022 for our first Performance update in our Investing competition. Interesting market out there right now

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mispoken

7 months is statistically irrelevant when long term investing, but....sure, why not. What makes the market interesting?

Trip7

It is statistically irreleveant, but lets keep each other updated biannually. Market is interesting because by there is blood in the streets, including my own (BABA)



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Gunfighter

Dang, it is a bloodbath. Some of those like Zoom and Peloton were predictable. LMND is in my portfolio from a Motley Fool recommendation. Fortunately the dividend stocks have been holding their own.

Meanwhile cap rates on commercial real estate are at historic lows. Cash out refis or rate term refis are very attractive. Inflation is driving up rents on lease renewals, but has zero impact on debt service. As long as wage growth keeps pace with inflation, this is a windfall for leveraged cash flowing real estate with long term debt.

Trip7

I think it's just begun. TSLA, GME, CAR and AMC all still trading at absurdly high valuations. When those crack to the downside blood will be gushing in the streets.

Real Estate, particularly single family homes and multi family properties seem to be fair value at best, well overvalued at worst. Self storage seems ok. Crazy times. Investing with a wide Margin of Safety is of utmost importance these days

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crzepilot

Golden Butterfly