Alternative Investments - Public Real Estate Investments

Hi All - Im referring to reading 39 page 14, ‘Tax Benefits’

Could someone please help me understand what the tax benefits are of investing in Private Real Estate? I’m struggling to understand the explanation in the textbook. What is meant by a ‘Depreciation tax shield’?

Thank you so much!


Depreciation is tax deductible. Hence, any depreciation expense has a certain value to the investor as it lowers the effective tax payments. The tax-benefit (= depreciation tax-shield) to the investor is tax-rate * depreciation amount.

Cheers, Oscar