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Mentor
Depreciation
Mentor
You calculate it and pay it.
It’s a small line item in the transaction. Plus you have to take depreciation, so just run the numbers and pay it.
Subject Expert
As SPM said… depreciation is most common… we have 4 properties… but we don’t depreciate them… the reason being that 1) I don’t want to deal with the recapture, and 2) if you continue to offset losses against your personal income, it creates an environment where underwriting is more difficult and it has the potential to affect your DTI…
I’ve had enough clients be absolutely furious with me when we cannot approve a requested loan or LOC, because they’re showing $30,000 losses on 5 different properties… you make $400K/year, sure… but it looks like $250K…
Underwriting follows the numbers… they could care less about the narrative…