Depreciation - one property vs two

[Greg Junge]

Hi BP,

I know this a question for my cpa but just wanted to get thoughts from you all regarding depreciation. I have a property worth 85k and I've had it for 3 years or so.  I understand how depreciation works, but just wanted to ask...

With all things being equal, does it benefit me and/or my taxes if I sell this property and buy two properties with leverage?  Let's say the new properties are 200k each.  I assume the answer is yes because I'm depreciating two properties instead of one, and the value of what I'm depreciating is of higher value also?

Am I correct in my thinking?  I know not to let the tax tail wag the dog, but just wanted to get a perspective from the tax and depreciation side of a deal.

Thanks in advance for any responses!
Greg 

[Jaysen Medhurst]

@Greg Junge, leverage will improve all of your metrics. Don't forget about appreciation and mortgage pay-down.

In the scenario above you'd take ~$9600 of depreciation/year, vs. $2k now, and see $8k of appreciation/year vs. $1700 now (assuming 2%), plus $10k of mortgage pay-down/year (averaged over a 30-year loan).