There are several tax benefits to real estate. There is now Go Zones and Special Enterprise Zones that can offer tax incentives.
For homeowners up to 250K of their capital gains tax is exempted for a single person, 500K for a married couple, for people who qualify. They must have owner-occupied the property for 2 of the past 5 years to claim this exemption. You can claim this exemption every 2 years.
This investor favored tax rule allows property owners to roll over their capital gains tax and depreciation recapture tax if they buy another property of “equal or greater value”.
Owners of investment property may take a small loss each year for depreciation which shelters either the properties income or your ordinary income. Depreciation boost cash flow for income properties.
In California, property taxes are governed by Proposition 13. This limits assessed values from increasing more than 2% each year which traditionally has been far exceeded by the appreciation of 3% or more. This offers long term owners significant savings.
If you hold real estate longer than 1 year it is considered a “long term investment” which means you pay capital gains tax on those earnings which is signifantly less the income taxes. Capital gains can range from 20% to None and depends on your tax bracket.