Depreciation & Amortization in Real Estate Accounting

1
Depreciation Amortization in Real Estate
Accounting

• Presented by Exo Edge

2
Introduction to Depreciation Amortization

• Depreciation The systematic allocation of the
  cost of a tangible asset over its useful life.
• Amortization The gradual expensing of intangible
  assets over time.
• Why it matters Helps property managers and
  investors allocate costs effectively, reduce tax
  liabilities, and maintain accurate financial
  records.

3
Depreciation in Real Estate

• Common depreciable real estate assets
• Buildings structures (excluding land)
• Property improvements (e.g., landscaping,
  lighting)
• Depreciation Methods
• Straight-Line Method Equal expense allocation
  over asset life.
• Declining Balance Method Higher expenses in
  earlier years.
• IRS Guidelines Residential rental property
  depreciates over 27.5 years, commercial property
  over 39 years.

4
Amortization in Real Estate

• Applied to intangible assets like
• Leasehold improvements
• Loan fees financing costs
• Goodwill trademarks (if applicable)
• Typically follows straight-line amortization over
  the assets useful life.
• Helps in financial planning and tax deductions.

5
Key Takeaways Impact

• Depreciation amortization help in tax savings
  and cost allocation.
• Understanding IRS regulations is crucial for
  compliance.
• Proper accounting ensures accurate financial
  reporting and investment decisions.
• Leverage technology accounting software for
  efficient tracking.