Real Estate Investment Software

Learning how to depreciate rental property is a vital skill to have for any landlord or real estate investor. There are two depreciation methods available–the straight line method, and the double declining balance method–for an investor to choose between. Since every property paired with a real estate investor is financially unique, the investor should run the calculation both ways to find out which way works best for their situation. The current insured replacement cost will help an investor obtain the data values needed to run the calculation. The land value, structure value, and fixture values are all used when calculating depreciation–regardless of the depreciation method being used. The real estate investor would also need to get the state and federal tax rates as well. Once this information has been obtained, the calculations can be performed.

Depreciation formula for the straight line method:
Current Value – Salvage Value / Years left of productive life

Depreciation formula for the double declining balance method:
(Current Value - Salvage Value) * (2 * 100% / Years left of productive life)