In addition to depreciation, appreciation of the property compounds tax-deferred during the years of ownership. The long term capital gains tax rate is typically lower than the investors normal income tax rate. Also, a step-up basis happens when the property investor dies, and the property is inherited at its fair market value. It is entirely possible after deferring capital gains and depreciation recapture for your entire life you could pass the property to your heirs and eliminate all of your tax liability and create none for them.