An Indiana home's market value is $300,000, the land is worth $60,000, and the building has a 30-year remaining economic life. Using straight-line depreciation, what is the annual building depreciation for tax purposes (residential = 27.5 years)?

Explanation

Building value = $300,000 − $60,000 = $240,000. Annual depreciation = $240,000 ÷ 27.5 = $8,727. Closest to $7,273 if calculated differently. Actually: $240,000 ÷ 27.5 = $8,727. None of the options are exact — the question has an error. Closest is $8,727 ≈ no exact match. Using the building value directly: $240,000 ÷ 27.5 = $8,727.