<--Back to Wiki Home
Depreciable basis, in the world of real estate, is the part of a property's value that can be used to calculate how much it loses in value over time due to wear and tear. This usually applies to the buildings and improvements on the land, but not the land itself, because land doesn't wear out. Think of it like a car that loses its value as you drive it more and more; the depreciable basis helps you figure out how much the car's worth after using it for some time.
For example, imagine you buy a property for $500,000. The land it's on is worth $200,000, and the building on the land is worth $300,000. Since land can't be depreciated, the depreciable basis would be the $300,000 value of the building. Over time, you would calculate how much the building loses value due to wear and tear based on that $300,000.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
In the land of homes and buildings, where things may lose their sheen,
A thing called depreciable basis can be easily seen.
It's part of a property's value, the buildings and their grace,
But not the land they rest upon, as it holds a steady pace.
Imagine now a property, worth half a million green,
With land worth two hundred grand, and a building like a dream.
The building's worth three hundred grand, and that's the part we weigh,
As depreciable basis shows us how, its value fades away.
Oh, depreciable basis, in the world of real estate,
You help us grasp the value, of buildings as they fade.
In the land of homes and buildings, where values rise and fall,
Depreciable basis is our guide, to know just what to call.