Which of the following is NOT a benefit of tax sheltering aspects of real estate investments?

In the context of real estate investments, a key benefit associated with tax sheltering is the ability to defer or minimize taxes owed through various means. Depreciation, leverage, and tax deductions all contribute significantly to tax advantages in real estate, allowing investors to reduce their taxable income or enhance their funding capacities.

Depreciation allows investors to deduct the perceived loss in value of a property over time, which can be used to offset income, reducing the amount of tax owed. Leverage refers to using borrowed capital to finance investments, which can magnify returns, but it also offers tax advantages like the ability to deduct interest payments on mortgage loans. Similarly, tax deductions can arise from various expenses associated with property ownership, such as maintenance, management fees, and property taxes, further lowering taxable income.

In contrast, capital gains tax represents a tax liability rather than a benefit of tax sheltering. When an investment property is sold for a profit, the gain may be subjected to capital gains tax, which is not a benefit but rather an obligation that investors must consider. Hence, the presence of capital gains tax distinguishes it from the advantages that depreciation, leverage, and tax deductions provide in the realm of tax sheltering.