Quote:
Originally Posted by anyonebutedmonton
Ok, so in that case the entire value of the investment is in the building (assuming you don’t hold the ground lease). I don’t see the issue in depreciating the entire value. Buildings are depreciable for a reason. They eventually need to be replaced. You can argue the rate of depreciation is too high, perhaps.
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Except the buildings are actually appreciating in value in the entire time regardless of whether the building needs to be replaced, and buildings are hardly ever 'replaced' and instead are simply maintained with periodic renovations.
Multi-tenant buildings as an example are often notorious for maintaining the absolute bare minimum, while appreciating the value of the building for the owner. On top of that the owners will also lobby the government to approve a 'rent' increase, and then use that to justify property upgrades.
It also makes little sense to me how the depreciation rate works considering the owner can also expense almost every single thing he wants while 'operating' that building and write it off.
The whole thing is a corrupt sham and needs to be completely overhauled.