can someone explain the property non cash depreciation here? and elaborate the answer
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Non cash depreciation is nothing but the depreciation expense of property. The term non cash is just an adjective saying that depreciation charge is a non cash charge.
The depreciation of the property when we buy real estate directly can reduce the taxes.
When you buy direct Real Estate, you can charge depreciation on the same which is a non cash charge and can be shown in the Income Statement on the expense side. This will reduce your Net Income and in turn lower your taxes payable. So you have tax benefit while buying a Real Estate directly.
One benefit of Owing a Real Estate is that the specifies building or complex would be subject to depreciation which is a non cash expenditure. So as we incorporate the amount of depreciation and deduct it from our earnings we are able to save taxes which we might have to have had there been no depreciation on the building.
Other options are some of the disadvantages of having a real estate (property)in our porfolio as we would initially require huge amount of funds to be able to procure that property and another issue is that once we incorporate such property in our portfolio , it would have a big chunk of our investable funds due to its high price because ordinarily we dont invest loads in equity or Bond Markets . In simpler words there would mismatch of our portfolio.
Hope this helps !
We learnt in accounting that land does not depreciated as it’s life is infinite, then why in this topic we are depreciating it?