Jinsi ya kukokotoa Real Estate Depreciation
Real Estate Depreciation ni nini?
Real estate depreciation allows investors to deduct the cost of a rental property over its useful life (27.5 years for residential, 39 years for commercial in the US), reducing taxable rental income even if the property is appreciating in value.
Mwongozo wa Hatua kwa Hatua
- 1Annual depreciation = (Purchase price − land value) / 27.5 years
- 2Land cannot be depreciated — only the building (typically 70–80% of purchase price)
- 3Depreciation is a "paper" deduction — it reduces taxable income without a cash outflow
- 4When you sell, depreciation is "recaptured" and taxed at up to 25%
Mifano Iliyotatuliwa
Ingizo
$400,000 rental, $80,000 land value, 27.5 years
Matokeo
$11,636/year depreciation deduction
($400k−$80k)/27.5
Ingizo
$1,200 monthly rent, $11,636 depreciation, 25% tax bracket
Matokeo
Save $2,909 in taxes/year
Effective after-tax rent income boosted significantly
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