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In Industrial Property is valued at $475,00. The land value is 15% of the total value. Calculate the annual IRS depreciation deduction. (round to the nearest dollar)

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The annual IRS depreciation deduction for the industrial property is; $40,375.

IRS depreciation deduction

The amount of depreciation deduction is equal in each year over the serviceable life of the property. On this note, it follows that the formula is given by:

  • Straight line depreciation each year = (Cost of the asset - Salvage value)/Serviceable lifetime

Hence, the depreciation deduction in each year is;

  • Depreciation = ($475,000 × 0.85)/10

  • Depreciation = $40,375.

Remarks: The serviceable lifetime of the property is 10 years and the value of the property is; $475,000.

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