> You can only deprecate the improved value, not the value of the land. "The land beneath a building does not deprecate, whereas the value of the building shoul

> You can only deprecate the improved value, not the value of the land. "The land beneath a building does not deprecate, whereas the value of the building should." -- a good idea by huevosabio that I saw in this thread. At least for residential R/E in the US - you cannot depreciate land from taxable income. > Owners pay taxes on the claimed lease value, regardless of current occupancy. This would disincentivize owners from just sitting on dozens of properties refusing to lease because nobody wants to pay their unrealistic exorbitant rates. You're misunderstanding the point. From an accounting perspective, you can pretend unleased units have revenue - and that vacancy is an expense. You can get loans on your revenues (imaginary money in the case of R/E). R/E speculators want as much debt as possible - because they know that debt (especially leveraged) at interest rates typical of the last 12 years was the free money cheat code. This incentives them to have empty units at 100% above market rates - because they can qualify for twice as much debt to buy more properties to do the same thing - to speculate further on leveraged appreciation. It's also the reason you regularly see building with outrageous rents yet they're giving you 3+ months free. Why not just lower the rent by 25%? Because then you qualify for 25% less new debt (which in many cases they need new debt just to cover their deeply negative cash-flow).