Liberal Forum

Xavier_Onassis » 16 Apr 2023, 11:39 am » wrote: ↑

16 Apr 2023, 11:39 am

The moment they put a cap on prices, all prices will likely rise to the cap. So for the short term this is a bad idea. Price controls did not work for Nixon.

The tax system promotes higher rent.
There is a false assumption in the tax code that housing will depreciate 5% annually in value.
So every year the landlord gets to claim a 5% deduction, in addition to maintenance costs.

After the property is 100% depreciated in 20 years, it is worthless for tax purposes. In reality, it is worth much more.
So the landlord is motivated to SELL it, and he can do this,m make a huge profit, and invest in another rental income property.
The new landlord then gets a 5% annual deduction. But since the new landlord paid a lot more, he is forced to raise the rent to make a profit.

To calculate the total depreciation over 20 years for tax purposes, you can use the straight-line depreciation method, where an equal amount of depreciation is taken each year.The formula for straight-line depreciation is:(depreciable cost) / (useful life) = annual depreciation expensewhere the depreciable cost is the original purchase price minus the estimated salvage value (i.e., if the property is sold at the end of its useful life, how much it is expected to be worth), and the useful life is the number of years over which the property is expected to be useful (in this case, 20 years).Let's assume the property was purchased for $100,000 and is expected to have no salvage value after 20 years. Then:($100,000 - $0) / 20 = $5,000The property will depreciate by $5,000 every year for 20 years, totaling $100,000 in depreciation over the entire period for tax purposes.