How do depreciation costs on the house deducted from income

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Explain and compare these four different scenarios on how mortgage, depreciation and tax expense impacts decisions on whether or not to purchase a single family income property as an investor.

Scenario 1: If the mortgage rate rises from 5% to 10% yet the appreciation of houses that consumers can buy rises from 2% to 9% would you be more likely or less likely to buy a house as an investor?

Scenario 2: If interest rates were able to be deducted from income, would you change your decision in Scenario 1?

Scenario 3: In the case of Scenario 2, if taxes on the property were fully deductable from income earned, would this change your decision from Scenario 1?

Scenario 4: How do depreciation costs on the house deducted from income affect the outcome on Scenario 1 during an inflationary or deflationary economy?

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The paper is in relation to computing the feasibility investment in single family income property as investor under various circumstances viz. appreciation of value, increase in interest rate of mortgage, deduction of expense incurred as mortgage interest paid, taxes on property and depreciation.

Reference no: EM13180753

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