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> Take Japan as an example: houses are considered a depreciating asset, like cars. Is there anywhere that doesn't consider a house a depreciating asset? Housi
by randomdata 3y ago
> Take Japan as an example: houses are considered a depreciating asset, like cars.
Is there anywhere that doesn't consider a house a depreciating asset?
Housing differs from cars as it is much more common to see people rebuild houses back to new condition, to upgrade them to use modern technology, etc. That effort can retain the outward value of a house as you basically have a new house again, but the deprecation cost is paid during those updates and modifications. You haven't escaped it.
- CapstanRoller 3y ago>Is there anywhere that doesn't consider a house a depreciating asset? The USA
- onlyrealcuzzo 3y agoYes, but technically - houses deprecate 1/27th of their value according to the tax code. So, although no one expects house prices to go down - there is an implicit understanding that the actual house depreciates - even if inflation is offsetting that and the land underneath it is pumping the total value up. Lets imagine the cost to build a house goes up 3% per year - if your house deprecates 3.7% per year - it would only go down .7% in nominal terms (3.7% in real terms). If the value of the land is 50% of the "home" value, and that appreciates by 6% - then your "home value" goes up in nominal terms & real terms - but not as much as it would have if the house didn't need maintenance (depreciation).