Save thousands of dollars by segmenting depreciation deductions. Identify your property’s short life assets so you can depreciate them sooner, and by accelerating your deductions you can save money on taxes.
People normally depreciate their properties using a straight-line deduction over 27.5 years, so for a property with a $275,000 basis, you can have a yearly depreciation deduction of $10k for 27.5 years.
Usually a property has shorter-life assets, like a refrigerator or a fence that can be separated and depreciated sooner over 5 or 15 years. When you identify those assets and depreciate them separately, you are taking deductions sooner. With the accelerated, higher deductions, you can offset your tax liability and save thousands of dollars, especially if you are already at a high income bracket.
For example, say the $275k property has 50k in 5 year assets (carpets, appliances, drapes, etc…) and 25k in 15 year assets (driveway, fence, patio, etc…). By depreciating these amounts separately, instead of deducting 50k over the first 5 years, you can deduct almost 100k. This can save you nearly $20,000 in federal and state taxes.
For a more detailed explanation and simple guided assistance, try using www.DepreciateEm.com to segment your depreciation deductions.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Segment Property Depreciation, Accelerate Real Estate Tax Deductions is brought to you by SimplifyEm Pay Rent Online and Property Management Software
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