Why a Depreciation Report Is Important for Older Vancouver Buildings

Depreciation reports are very important in older buildings in Vancouver for a few reasons. Depreciation allows for a deduction against taxable income generated from a building, so the depreciation will lower your taxable income. This is a very complex part of accounting, and we will give you a brief introduction to it, here, in our blog. 

What Is Depreciation? 

Regarding buildings—depreciation only applies to buildings, not land—depreciation is an accounting measure that allows you or your accountant to write down or deduct a certain amount of a building’s value each year until it reaches zero. 

What Is Included in Depreciation? 

This is where it gets tricky. The answer is “it depends.” There are a lot of rules regarding how to calculate depreciation. First, there is the building structure, but depreciation can also include other types of fixed assets like outbuildings or greenhouses and sometimes even tools that wear out over time. The key here is determining what is classified as a fixed asset, although some fixed assets may be depreciated at different rates than others. 

Why Is This Important in Vancouver? 

The reason why this is particularly important in Vancouver is because the cost of real estate is so high in Vancouver. Since the cost of real estate is very high, rent is also very high. So, if you are the owner of a building that rents out residential units or business office units, you will have a large income, against which your building depreciation can be a deduction for tax purposes. 

This is a topic worth discussing with your business accountant before purchasing a building because the depreciation report can significantly affect your taxable income.  

For a home inspection on the Lower Mainland, give us a call at (778) 788-5301. This is our business and area of expertise. 

The Inspectors is a group of very experienced home inspectors who bring reliability and integrity to the practice of home inspection. These inspectors follow closely the established standards of the Canadian National Association of Certified Home Inspectors. 

If you have any questions about this article or would like to talk to us about home inspection, we encourage you to call us at (778) 788-5301.