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Say I buy a beach home as a business LLC. If I don't turn a profit till the mortgage is paid off, how exactly does depreciation work/help?

Does "turn a profit" mean have positive cash flow? While cash flow is definitely an issue, it is irrelevant to tax profit/loss. The mortgage payments are a combination of principal and interest. The interest is deducted as a current expense. The basis of the property is depreciated over 27.5 years. Depreciation is how you take the expense of the principal payments.

Rental real estate is, by definition, a passive activity. There is an exception to the normal treatment of passive losses if you are "actively" involved in its management. Any passive losses you can't currently recognize are stored up until you turn a tax profit or dispose of the activity, at which time they reduce your income/gain.

See Pub 527.

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