Regarding Commercial NNN Property -- What is the depreciation allowance or calculation on a NNN property?

In Buying Property - Asked by Scot K. - Mar 17, 2011
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Davide P.
Pinole, CA

A commercial building is depreciated over a 39 year straight-line method (residential/apartments are 27.5). Let's presume you have a $1.2 million dollar property and $200,000 is in the land. You would take the remaining $1M and divide by 39 which is roughly $25,641 in depreciation that could be realized per year. There are some other tricks such as the mid-month convention when you buy and sell, recapture rate, etc, but this is the simplified explination.

Mar 18, 2011
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Nick H.
Lender/Mortgage Broker
Roseville, CA

You also have to look at any equipment in the building. There are different schedules for commercial properties. The building goes off of a 39.5 year less the land value. If this was new the improvements, heat and air, landscaping, furniture, sidewalks, and etc all have a different term, 5, 7 and 15 years. Each property is different and your CPA needs to be up on this.

Mar 22, 2011
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Kristle B.
Los Angeles, CA

My name is Kristle Breland, and my partners are Brokers: Robert Melamed and Jackie Yashar. Combined we have over 30 years experience. Please give me a call so we can assist you.
Realtor, Kristle Breland
DRE License # 01892057
323-424-6460 Cell
310-954-0573 Direct

Mar 29, 2011
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Tai N.
City Of Industry, CA

Scot, Davide has provided you with a simple and correct explanation. However, I would like to supplement it with this, first if it is a NNN property, is a fee simple ownership, ground lease, etc.? Once you have determined what it is you are looking at, next what is it are you or your clients trying to achieve? Accelerated depreciation? If you are or not, I would advise you to seek the advice of a qualified CPA that is familiar with commercial real estate to formulate a depreciation schedule accordingly. Good luck.

May 26, 2011
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