In real estate your cash flow can be much higher than your taxable income due to depreciation. Since it's unearned income, you don't have to pay payroll taxes.

In real estate your cash flow can be much higher than your taxable income due to depreciation. Since it's unearned income, you don't have to pay payroll taxes. And you can also avoid paying capital gains tax on the first $250k in capital gains on a property (after 1 year). There are a lot of people in speculative markets that pay close to 0 tax in real estate.