A$.$ You purchase a house for $$150,000$ that you intend to rent out. For taxation purposes, what is the cumulative depreciation at the end of the $8$th year?

B$.$ Assuming that your normal tax rate on your income is $25\%,$ what is your annual tax savings by having this investment property? What is your cumulative tax savings after $8$ years?

C$.$ What will the book value be at the end of the $8$th year?

Ordinary tax rate is $25\%$

Capital gains will be levied at a $15\%$

D$.$ Real estate property will typically increase in value over time. You intend to sell the property after the $8$th year and estimate that the market value will be $$200,000.$ What will you have to pay in taxes $($Ordinary & Capital gains$)$ as a result of the sale?

Answer rating: 100% (QA)

Lets break down each part of your question step by step A Cumulative Depreciation at the end of the 8th year To calculate depreciation we first need to determine the useful life of the property for ta... View the full answer