Real Estate Math
Using straight-line depreciation, a commercial building valued at $900,000 (land value excluded) with a 39-year economic life depreciates annually by approximately:
A$20,000
B$23,077✓ Correct
C$25,000
D$18,000
Explanation
Annual depreciation = Building Value / Economic Life = $900,000 / 39 years = $23,076.92, approximately $23,077. IRS straight-line depreciation for commercial real property uses a 39-year recovery period (27.5 years for residential rental property). Land is never depreciated.
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