Tax Impacts. Real estate as an investment class benefits from certain tax characteristics, primarily from the fact that real estate can be depreciated. Depreciation provides a tax shield for income at ordinary income rates, and then when the real estate is sold, the taxes due are often recovered at lower capital gains. Any reasonable analysis of an investment in real estate needs to take the tax impacts into account and so the returns should be done on an “after-tax” basis. So you should involve your CPA before you purchase to get the big picture.