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Benefitting from depreciation with your investment properties

Friday, April 20, 2018   /   by Taryn Hale

Benefitting from depreciation with your investment properties

Depreciation often has a negative connotation. However, in some cases, depreciation can be awesome. 

One situation where deprecation can be the hero is when you have an investment property and it comes time to file taxes. Depreciation is the process through which the costs of owning an investment property are spread out over the "useful life" of the property. 

Depreciation can start as soon as the property is ready for tenants. It can continue until the cost of the property has been deducted, or when the property is sold, destroyed or converted for personal use. 

These things can get complicated, and we urge you to hash these numbers out with your tax professional. But here are some bullets to give you the gist of it:
  • Depreciation only applies to the building, not the land. So when you are calculating depreciation, you need to subtract the land value from the purchase price.
  • There are two different deprecation "systems," of which the General Depreciation System (GDS) is the most commonly used. This system uses a recovery period of 27.5 years for a residential rental property. 
  • Keep in mind that if you depreciate a property, and then sell it for more than it's depreciated value, then you will have to pay a depreciation recapture tax.
If you would like to get started with your own investment property, just give us a call. We can sit down with you to show you the numbers, and even help you find a good investment property!
Elite Results Realty
Rob Hale
1744 S. Val Vista Dr Ste 206
Mesa, AZ 85204
480-845-0048

© 2020 Arizona Regional Multiple Listing Service, All rights reserved. The data relating to real estate for sale on this website comes in part from the Arizona Regional Multiple Listing Service. Real estate listings held by brokerage firms other than Elite Results Realty are marked with the Arizona Regional Multiple Listing Service logo and detailed information about them includes the name of the listing brokers. All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) nor Arizona Regional Multiple Listing Service shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. December 1, 2020
© 2020 Arizona Regional Multiple Listing Service, All rights reserved. The data relating to real estate for sale on this website comes in part from the Arizona Regional Multiple Listing Service. Real estate listings held by brokerage firms other than Rob Hale - Elite Results Realty are marked with the Arizona Regional Multiple Listing Service logo and detailed information about them includes the name of the listing brokers. All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) nor Arizona Regional Multiple Listing Service shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. December 1, 2020
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