If depreciation is an allowable expense for the purposes of calculating taxable income, then its presence reduces the amount of tax that a company must pay. Thus, depreciation affects cash flow by reducing the amount of cash a business must pay in income taxes..
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Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow.
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Calculating the cash flow from an investment in rental property will tell you whether your investment makes economic sense. Here's how to do it..