A Burned-Out Tax Shelter refers to a real estate investment that was once advantageous for providing large income tax deductions but has lost its tax-sheltering benefits over time due to the reduction and eventual nil in depreciation deductions and the decrease in interest deductions as mortgage payments increasingly cover the principal.
Interest deductions under current tax law vary based on the type of interest incurred. From investment interest to consumer interest, different rules apply for deductibility.
The Mortgage Interest Deduction is a tax incentive for homeowners which allows them to deduct interest paid on a mortgage of their primary residence or secondary residence from their taxable income.
