Income: Either active management income or passive rental income.
Depreciation: A “paper loss” that CRA allows to be deducted from your active income which you pay tax on. Depending on your circumstances it is possible to legally offset a large portion of active income tax by owning a sufficient amount of income producing real estate.
Equity: Grows over time. It is the difference between the value of the property and any underlying mortgages. Each month residence add equity through rental payments. Equity is recaptured through property sale or refinance with a new loan.
Appreciation: Increases to the value over time through market appreciation or forced appreciation. Appreciation adds to the amount of equity in the property.
Leverage: Ability of amplify returns through responsible use of leverage. Refinance the property at the new higher value and pull-out equity tax-free, use this cash to invest in additional properties and repeat!
