Real Estate Math
A Kentucky property is purchased for $215,000 and depreciates on a straight-line basis over 27.5 years (residential rental). What is the annual depreciation deduction (improvements only, assuming land value is $35,000)?
A$7,818
B$6,545✓ Correct
C$7,273
D$5,818
Explanation
Depreciable basis = Purchase price minus Land value = $215,000 minus $35,000 = $180,000. Annual depreciation = $180,000 / 27.5 = $6,545.45 per year.
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