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What benefit can result from proper depreciation expense management in property functions?

Higher maintenance costs

Lower taxable income

Proper depreciation expense management in property functions can lead to lower taxable income. Depreciation is a method of allocating the cost of a tangible asset over its useful life and serves to reflect the asset's declining value as it ages. By effectively managing depreciation, property managers can ensure that they are accurately reporting the expenses associated with their assets.

When depreciation is correctly applied, it reduces the amount of taxable income reported by the property owner or management company, since these depreciation expenses can be deducted from total revenue. This has the benefit of reducing the overall tax burden, allowing for more capital to be reinvested into the property or used in other profitable ventures. Thus, the sound management of depreciation can significantly enhance financial performance and tax efficiency for property functions.

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More frequent asset appraisals

Higher property valuation

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