Claiming Depreciation for Tax Purposes
Somewhat confused here, how can a property appreciate, yet one can claim depreciation for tax purposes. I heard Depreciation is a bigger factor for higher end property just how big is factor would it be for say a 350-400 thousand dollar home?
Most Popular Reply
- Tax Strategist| National Tax Educator| Accepting New Clients
- 4,544
- Votes |
- 3,798
- Posts
Because real estate doesn't function the way most real property does.
When the laws were set the IRS assumed any real property (computer, building, desk,) would have a limited life. And a lot of the time, it's fairly true.
A lot of cities are re-assessing the values in high market areas the the amount assigned to land vs. building is getting put much more toward land- because ultimately that's what's going up in value more. There's limited space in Seattle. People don't want this crappy house for $300k- they want the land and are going to tear down that crapy $300k house and build a $600k house on the land.
