How depreciation is calculated on commercial property

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Depreciation of investment real estate can be a significant tax benefit. Commercial property depreciation differs from home property depreciation and these differences can be used to get the most out of tax benefits.

How to Calculate Depreciation on a Commercial Property | Onefctv
How to Calculate Depreciation on a Commercial Property | Onefctv

Straight-line depreciation
Step 1

Calculate the total base price of the commercial property you are depreciated.

Step 2
Divide the total value by 39 to get your annual depreciation on a straight-line basis.

Step 3
Apply depreciation to your tax annually for at least 39 years until the property is depreciated.

Differentiate commercial property depreciation costs
Step 1

Separate commercial real estate assets using technical reports into four separate categories: personal property, land renovation, buildings, and land.

Step 2
Depreciation of allocations to personal property within 5 to 7 years by the method of decreasing.

Step 3
Depreciation of the amount allocated for land re renovation for 15 years by accelerated method, such as the balance method is gradually reduced by 150%.

Step 4
Depreciation of parts of the building separately to take advantage of different tax benefits. For example, although the roof is part of the building, you can depreciate it more quickly.

Step 5
Allocate the remaining amount to the land grade.

In any case, do not try to do this without the support and direction of skilled tax, accounting, and technology professionals.

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