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Is real estate actually treated as depreciation, or is it an asset with associated maintenance costs? Depreciation is just an accounting trick, e.g. if you buy
by tomp 5y ago
Is real estate actually treated as depreciation, or is it an asset with associated maintenance costs?
Depreciation is just an accounting trick, e.g. if you buy a laptop, you can’t put it in costs immediately (in the profit = sales - costs equation), it depreciates over say 4 years (i.e. only 25% of the purchase price can be accounted as cost each year).
Does this really happen with property? There’s no fundamental reason why a 100 year house wouldn’t be worth just as much as a new one, with proper maintenance (which can, and IMO should, be accounted separately).
- ErikVandeWater 5y agoIn Japan houses depreciate quickly because there isn't a restrictive housing code that prevents new housing from being built. Also, houses built today have better design and better safety. I wouldn't want to live in a 100 year old house in LA.
- tomp 5y agoYou’re using the word “depreciate” in the common usage (“value of an asset goes down”) not in the accounting usage (“a line in the P&L statement used to offset the profit and pay less tax”)
- ErikVandeWater 5y agoAre you saying landlords in Japan cannot use depreciation against profits made?