How is rental income taxed? Can it be reinvested to avoid taxation?
Rental income is like any other income. The only thing is that it can be offset by depreciation of the house. For example if the house is worth $100,000 and the land is $10,000 you can depreciate $90,000 over 27 1/2 years. So for the year you take $3,300 in depreaciation. If you have $300/month in positive cashflow that is $3,600/year and you depreciate $3,300, you pay taxes on $300.
That is why real estate is so great.