The structures are generally the majority of the value of the property.

> Mortgage interest is not included in the basis of real property or in depreciation. It's just another deductible expense.

Nonetheless it's a major expense and fully deductible. They also get to deduct property maintenance etc.

> Most real estate companies are partnerships or REITs due to special tax provisions. But most of their investors are corporate entities.

A group of ten individuals who get together to buy an apartment complex are not a corporation. Moreover, if the investors are a corporation, it's still one less layer of indirection -- for a corporate investor, if the real estate holding company were an S Corp you would be paying corporate income tax twice.

> Real estate is a cash flow game: real properties are purchased through commercial mortgages, and rental income services the debt.

This is true until the debt is paid, but then isn't that the point? They get to deduct the interest and depreciation and maintenance, and wipe out their rental income.

> Because of this, real estate investment flourishes in low tax years: as a result of depreciation, the cost basis of the real property has been reduced, so the taxable income from the sale has increased.

That would result in real estate sales in low tax years, i.e. willingness to divest rather than willingness to invest. During the high tax years people would want to buy/hold and continue speculating to continue to defer paying the high taxes on the appreciation.