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Minimum Tax, Recapture and Choice of Depreciation Methods

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  • C. F. Sirmans

Abstract

This paper examines the problem of the trade‐off between the possible minimum tax consequences of accelerated depreciation, the recapture of excess depreciation, and the choice of depreciation methods for maximizing investor wealth. The model is simulated for various ranges of the inputs to which the depreciation selection decision is sensitive. The results indicate that for high marginal tax rates, reasonably long holding periods, and reasonably high discount rates, the investor should select the accelerated methods after considering the minimum tax and recapture consequences.

Suggested Citation

  • 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, September.
    • Handle: RePEc:bla:reesec:v:8:y:1980:i:3:p:255-267
    DOI: 10.1111/1540-6229.00216
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    Cited by:

    1. Pellechio, Anthony J., 1988. "Taxation, Rental Income, and Optimal Holding Periods for Real Property," National Tax Journal, National Tax Association, vol. 41(1), pages 97-107, March.
    2. Austin J. Jaffe & C. F. Sirmans, 1984. "The Theory and Evidence on Real Estate Financial Decisions: A Review of the Issues," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 12(3), pages 378-400, September.
    3. Pellechio, Anthony J., 1988. "Taxation, Rental Income, and Optimal Holding Periods for Real Property," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(1), pages 97-107, March.
    4. Patric H. Hendershott & David C. Ling, 1984. "Trading and the Tax Shelter Value of Depreciable Real Estate," NBER Working Papers 1267, National Bureau of Economic Research, Inc.

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