Trading and the Tax Shelter Value of Depreciable Real Estate
For well-diversified investors in depreciable real estate, the trading decision may be made with the sole objective of maximizing the property's depreciation tax shelter net of all capital gain taxes and transaction costs.This paper develops a dynamic programming model in which the optimal trading strategies and depreciation methods of all investors in a property are simultaneously determined. The effects of inflation, depreciation, recapture and choice of depreciation method are analyzed, and the costs of suboptimal trading are measured. The model is applied to both conventional residential and commercial income properties under post-ERTA tax rules. At single digitinflation rates, properties are traded multiple times, and the costs of suboptimal trading are significant.
|Date of creation:||Jan 1984|
|Publication status:||published as Hendershott, Patric H. and David C. Ling. "Trading and the Tax Shelter Value of Depreciable Real Estate." National Tax Journal, Vol. 37, No. 2, (June 1984), pp. 213-223.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- C. F. Sirmans, 1980. "Minimum Tax, Recapture and Choice of Depreciation Methods," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 8(3), pages 255-267.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1267. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.