Because there are two main components to the residential rental market. One is land; the other is improvements. Buildings only make up part of the improvements. Depreciation applies to curtains and stoves etc as well. Land has increased in value but not to the extent shown in property valuation increases - particularly pre 2007 peaks. Which means the other part of the increase has had to come from the improvements. So the improvements have actually increased in value rather than depreciated.
I'm not suggesting that the depreciatiton shouldn't be allowed - its just how it is treated at sale time.
Bookmarks