Real Estate Math
A property has a building-to-land value ratio of 75:25 and a total value of $900,000. What is the depreciable basis (building value) for tax purposes?
A$225,000
B$675,000✓ Correct
C$900,000
D$450,000
Explanation
Building value = $900,000 × 75% = $675,000. Land is NOT depreciable for income tax purposes; only the improvement (building) can be depreciated. Land value = $900,000 × 25% = $225,000.
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