How do I calculate depreciation?
Depreciation is a deduction taken over several years. You generally depreciate the cost of rental property that has a useful life of more than a year, but gradually wears out, or loses its value due to wear and tear, weather damage, etc. To figure out the depreciation on your rental property:
- Determine your cost or other tax basis for the property.
- Allocate that cost to the different types of property included in your rental (such as land, buildings, so on).
- Calculate depreciation for each property type based on the methods, rates and useful lives specified by the IRS.
You use a calculator provided in the link below. And we provide a dialog to enter this expense in the accounting system for each individual property.
Note: The Leaseze Property Management system provides the expense accounting, however we do not account for book value of your property. This is unnecessary for your yearly income taxes, however it may be necessary when you sell your property.