DepreciateEm.com Real Estate Depreciation Help
How do I use help?
This help section was developed to help answer Frequently Asked Questions. You will find a help section on each screen on the right side with a list of FAQ's.
What am I doing now?
On this page you will learn more about depreciating your property.
What am I doing next?
On the next set of pages you will enter information about the properties you want to depreciate.
What is depreciation?
Depreciation is a deductible expense allowed for the reasonable wear and tear of assets. When an asset is purchased for business purposes, the expense cannot be fully deducted that year. Instead the expenses must be deducted over the lifetime of the asset using depreciation.
Who can depreciate?
You can depreciate if you bought residential rental property during the year. You can also depreciate if you purchased assets for your rental properties during the year.
What is an asset?
An asset is any item inside the property that is included in the value of the property.
What is a 1031 exchange?
A 1031 exchange is a transaction that allows taxpayers to defer taxes that would normally be due on the sale of an asset if there is a profit. You can defer taxes on the profit by reinvesting the proceeds into a new like-kind property.
Learn more from IRS...
Who can depreciate?You can depreciate if you bought residential rental property or if you converted your home into a rental property during the year. You can also depreciate if you purchased assets for your rental properties during the year.
What does DepreciateEm do?
DepreciateEm is a guided process that will allow you to separate your property's assets so you can accelerate your depreciation deduction, resulting in tax savings.
How does DepreciateEm work?DepreciateEm is an easy three step process. First you will enter settlement information for your property using your HUD statement. Second you will value the assets inside the property using fair market value. Lastly you can print out form 4562 and Detailed Report for your taxes.
Why should I use DepreciateEm?Normally depreciation is taken as a straight line deduction over a period of 27.5 years. Usually there are assets inside the property that can be depreciated sooner. By accelerating your depreciation, you have a higher deduction that will help you get substantial tax savings.
How do you calculate tax savings?Tax Savings are calculated assuming a federal tax rate of 35% and state tax rate of 9.3%. The actual tax savings are determined by multiplying the tax rate with depreciation deduction.
What does changing the tax year do?
If you purchased property or made improvements this year, you can enter current year's information to prepare for next year's tax season.
Learn more from IRS...
Setup Purchased Property(ies)
What am I doing now?On this page you can enter as many of your residential rental properties as you'd like. You can save the information and come back another time.
What am I doing next?When you click done you will return to the overview. In the next section you can adjust the basis of your properties using your settlement statement. Do I have to enter the address(es)? You do not have to enter the actual address, but it will make it easier for you to identify if you have multiple properties.
What is a 1031 exchange?A 1031 exchange is a transaction that allows taxpayers to defer taxes that would normally be due on the sale of an asset if there is a profit. You can defer taxes on the profit by reinvesting the proceeds into a new like-kind property.
Learn more from IRS...
Closing (Settlement) Information for Purchased Property
What am I doing now?On this page you will calculate the value of assets within your property, so you can accelerate depreciation and have a bigger deduction.
What am I doing next?Once you have completed depreciating your assets, you will be able to view a summary and print forms for your taxes.
What is an asset?An asset is an item within the property that is included in the basis.
How do I find the values for my assets?You can assign values for your assets and search for average costs using our guide. Purchase prices and fair market values can help you find appropriate values on the side.
What if I have multiple units within a property?If you are accounting for multiple units, enter the the total value of the asset for all the units on the property.
How was this list of assets selected?T-ReX's research team has compiled an exhaustive list of depreciable assets using data from the 2005 United States housing survey, which lists the most common equipment found in American homes.
How were these fair market values calculated?T-ReX has done a market survey on over 6,000 new and used assets. You can use these values to help you assess the value of items inside your property.
Learn more from IRS...Assets
Valuation of Assets
Basis of Assets
IRS publication 551
Enter Asset Values to get a Larger Depreciation Deduction
What am I doing now?Values that affect your basis are listed on your Closing Statement. On this page you will enter values affecting your basis that may have been overlooked.
What am I doing next?When you return to the overview screen, you will have the opportunity to evaluate assets within your property so you can depreciate them sooner and receive a larger tax deduction.
What is a Closing Statement?The Closing Statement, also known as the settlement statement, is a form developed by the office of Housing and Urban Development to ensure real estate transaction costs are fully disclosed. The form is used to itemize all charges imposed upon a borrower and seller from a real estate transaction. It gives each party a complete list of their incoming and outgoing funds.
Why do I want to use my Closing Statement?Some things are overlooked when determining the basis of a property. Often there are many associated costs that should be included. These costs can include fees like title and settlement charges, to lawyers and notary fees, to stamps and other taxes. By adding amounts listed on the Closing Statement, you can increase the basis of your property, which increases your depreciation deduction.
What is a basis, and why do we adjust it?Your basis is the value of your property. When you increase your basis, that means you have a larger value to depreciate. This allows you to deduct more against your income, and pay less on your taxes.
Learn more from IRS...Adjusted Basis
Basis and Settlement Costs
Basis of Assets
IRS Publication 551