What term is used to describe tax incentives provided by the government, such as depreciation?

The term "tax shelter" refers to financial strategies or products that will allow an individual or business to reduce their taxable income. This can include various mechanisms that provide tax benefits, such as depreciation, which allows investors to deduct a portion of the cost of an asset over time. This reduction in taxable income can lower the overall tax burden an individual or business faces, thereby providing an incentive to invest or engage in certain financial activities.

In this context, tax shelters serve as effective tools for managing financial liability by fostering conditions that encourage investment, often aligned with government policies aimed at stimulating economic growth. The concept encompasses various deductions, loopholes, and methods that reduce tax obligations, making it a broad yet crucial aspect of tax planning for real estate investors and other entities.