# Depreciating house asset



## Underworld (Aug 26, 2009)

My Accountant advises that I don't depreciate my rental property because if I ever sell, I'll be hit with higher fees.

Personally I don't really ever want to sell a place. In my mind any money saved from depreciation could be used for investment.

What are your thoughts on this?


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## Just a Guy (Mar 27, 2012)

You're going to pay taxes on things eventually, you can't legally avoid paying taxes but you can defer them for a long time.

If you never sell, then this is a legitimate way to defer your taxes a bit more. When you die, there will be a bigger hit to the estate. If you built up more equity by reinvesting, you could be further ahead. Without a crystal ball you'll never know...besides, you won't be around to spend it, so it doesn't really matter.


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## Underworld (Aug 26, 2009)

As a follow up question - I'd be interested in what each forum member is doing. Yay or nay for depreciating the property.


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## OptsyEagle (Nov 29, 2009)

Your current tax bracket matters as well. I will ignore your comment about never selling because things in life change. The big issue with depreciating your rental property is that you get a whole lot of small deductions while you do it. Those deductions will benefit you by the percentage of your marginal tax bracket, in each year that they are taken. The annual amounts may not move your tax bracket down in any meaningful way. The recapture when you sell, however, recaptures every deduction you took, over many years in the past, into one single taxation year. That can shoot your tax bracket up much higher, in that year.

In effect, you may pay a higher rate of tax on the recapture then you received on the deduction. That is probably the main reason it is discouraged by accountants.


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## NorthKC (Apr 1, 2013)

In my line of work, I see people selling their investment sooner than expected so they often get a big tax hit due to recapture if they have been depreciating the property all along. In the long run, it's nay. If expected to sell within 5 years, then yay.


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## Spudd (Oct 11, 2011)

I am not planning to depreciate mine. I'm in a low tax bracket now and will probably be in a higher one if/when I sell later in life.


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## Plugging Along (Jan 3, 2011)

My accountant advises me to appreciate when we are on the highest tax bracket with our other income. We get the immediate tax savings. 

We have a lot of variables in our taxes, so in the years where I want a lower income, we depreciate.


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## AltaRed (Jun 8, 2009)

I've never known anyone who held an investment property for more than 20 years, and most hold for only 5-15 years. As said above, life changes happen no matter one's current plans (marriage, children, divorce, health issue, re-location). I had an investment property for 10 years some time ago and I never did CCA depreciation because I knew it was not going to be a 'forever' hold. Taking depreciation really depends on whether being a landlord is likely going to be a major component of one's life.


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## Plugging Along (Jan 3, 2011)

Almost everyone I know how has invested in real estate has lasted much longer than 10 years. We are at 15+ And have no plans to sell for at least another 10 or more years, my Parents sold there first place last year after 35+ years, and still have their others. This seems to be the trend for the circle I know of. 

In our cases, we have taken care when it makes sense based on Tax brackets and knowing we will not sell anytime soon.


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