ComparablesLook at these case studies to see the difference between regular straight-line depreciation and acellerated depreciation. Taking straight-line depreciation is probably how your tax preparer currently calculates your current deductions. Consider howacellerated depreiation can turn a cash flow negative property neutral or cash flow positive.
Here are examples of how you can profit from depreciation. 2 Bedroom Single Family Home $200,000 Property Value Year One | | With Chattel Appraisal | Without Chattel Appraisal | Land Value
| $40,000
| $40,000
| | BuildingValue | $140,000
| $160,000
| Personal Property
| $20,000
| $0.00
| Tax Bracket
| 25%
| 25%
| Depreciation Allowance
| $9,091.91 | $5,818.18 | Actual Tax Savings
| $2,272.73
| $1,454.55
|
You Just Saved $818.18 Year Two| | With Chattel Appraisal
| Without | Personal Property
| $20,000
| $0.00
| Tax Bracket
| 25%
| 25%
| Depreciation Allowance
| $11,490.91 | $5818.18 | Actual Tax Savings
| $2,872.73
| $1,454.55
|
You Just Saved $1,418.18 Year three savings with acellerated depreciation would actually appear less versus straight-line depreciation if we continued to compare further in the manner above. What actually happens with acellerated depreciation is that you not only receive the personal property deductions across 5 years, but you continue to receive the remainder of the value (i.e., that value left after subtracting the non-depreciable land value and the chattel value from the total property cost) on the straightline schedule (across 27.5 Years). This means you "activate" at least 2 categories of depreciation deductions by using chattel appraisals as a tax strategy.
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