Thank You
Kenny@FHA Mortgages

1) The investor has to determine a capital expense floor value like $1000 to determine what’s a operational expense and what’s a depreciable capital expense, and then when something that’s being depreciated is replaced the remaining value is expensed, and the replacement begins it’s own depreciation schedule. All that has to be documented, keep all receipts.

2) The investor AND their CPA has to track that depreciation from cradle to grave (I say AND because no matter how good your CPA is, the associate accountant actually doing the work can and will make mistakes, check every single number on your tax return; this has saved us an audit and tens of thousands of shekels).

1) Cost Segregation Study; while most companies that do this are only interested in the big commercial buildings, we found one that would do residential for about $650, getting us way more depreciation.

2) land vs. improvement ratio; CPA’s will steer you to a 15% or 20% fixed value that I’ve been unable to confirm in *any* IRS document (ask the CPA find it), and the IRS says you “can” use the tax assessors ratio, but the IRS ATG says FMV and 2 other cost approaches work as well. We use FMV for an increase in depreciation of about $25k/house.

Just my 2 pennies…