How do we use Depreciation in terms of Financing Calculations?

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How do we use Depreciation in terms of Financing Calculations?

2007-08-31 17:21:51 · 3 answers · asked by ahmedmutar 1 in Business & Finance ➔ Renting & Real Estate

3 answers

Except for tax purposes, you don't.

2007-08-31 17:27:27 · answer #1 · answered by Anonymous · 1⤊ 0⤋

Depreciation is not used when applying for a loan (because it is a non-cash expense).

An investor does use depreciation to calculate his after-tax cash flow.

It is calculated like this:

Value of the building (not the land)
divided by 27.5 years (for residential properties only)
= Annual depreciation expense

2007-09-03 20:39:36 · answer #2 · answered by Genki 3 · 0⤊ 0⤋

Depreciation has nothing to do with real estate financing calculations.

2007-08-31 19:10:21 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋