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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (117789)	2/20/2009 4:40:27 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Skeeter, I agree with you. My only point was that the depreciation charges do not apply to the value of the land which in some cases is quite significant. In addition, there is another problem. Let's say I bought a property 20 years ago for 100K and it is now worth 500K (value of the structure only). I would get a depreciation tax credit on the purchase price of 100k, meaning I would be getting a tax write off of a few thousand per year. The problem is that because of the same inflation that raised the price of the structure and land, it might cost me a lot more than that per year for repairs to a 500K home to keep it in tip top shape. For example, a new kitchen might have cost 5k 20 years ago, but the same kitchen might cost 20K now. So even though depreciation is very accelerated, at a certain point it understates the economic cost of maintaining the property. Years ago I put a lot of energy into trying to value real estate because most of the models I saw didn't give me much confidence, but it gets quite complex. So I threw in the towel.