Real Estate Math

What is the annual depreciation allowance for a Hawaii residential rental property valued at $400,000 (land value $80,000) using straight-line depreciation?

AA. $11,636✓ Correct
BB. $14,545
CC. $10,000
DD. $20,000

Explanation

Depreciable basis = $400,000 - $80,000 = $320,000. Residential property depreciates over 27.5 years: $320,000 / 27.5 = $11,636.36 annually.

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