A Change in Real Property Tax Depreciation Methods? | AccountingWEB

A Change in Real Property Tax Depreciation Methods?

A recent study by Big 5 firm Deloitte & Touche released this week concludes that the current investment recovery depreciation schedules of 39-years for non-residential property and 27.5-year for residential property are too slow and should be changed.

The study, which is the most comprehensive depreciation study in over 20 years, shows that the economic value of property should more accurately correspond to a schedule of 20 years or fewer to properly reflect modern economic conditions.

According to Deloitte & Touche, previous studies neglected to consider the increased value to the property of improvements and upgrades, which causes understatement in the true rate of loss on property ownership.

"The fact that our study is based on current real estate values and considers the effects that renovations have on depreciation makes the study have immediate policy implications," said Randall Weiss, a tax partner and author of the study.

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