On 10/4/05, <b class="gmail_sendername">Andrew Sackville-West</b> <<a href="mailto:andrew@farwestbilliards.com">andrew@farwestbilliards.com</a>> wrote:<div><span class="gmail_quote"></span><blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">
<br><br>David Harrison wrote:<br>> On 9/30/05, *Mark Johnson* <<a href="mailto:mrj001@shaw.ca">mrj001@shaw.ca</a> <mailto:<a href="mailto:mrj001@shaw.ca">mrj001@shaw.ca</a>>> wrote:<br>><br>> <<<snippity doo-dah>>>
<br>><br>> This method works fine for assets that depreciate, like cars and<br>> computers. But, what about my house, or another asset that goes up in<br>> value? Would you then record "negative depreciation"? If you are
<br>> recording depreciation for your car, then I would argue that you should.<br>><br>> I trust I haven't confused the issue more ;)<br><br>Houses are interesting as they generally appreciate, plus you can<br>increase your basis in the house by making improvements which hopefully
<br>increase the value more than what you spend... I don't personally do<br>this as I'm too lazy, but a friend keeps an asset account for the house<br>which carries the purchase value of the house, as well as the associated
<br>mortgage accounts and interest expense accounts etc. Anytime he spends<br>any money that adds to the house in any way: repairs, new roof,<br>whatever, he records that not as an expense, but as an addition to that<br>asset.
</blockquote><div><br>This actually holds true for any improvement to an asset. The "proper" treatment is to add it to the cost base. Note, this does not apply to repairs, only improvements.<br></div><br><blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">
Then when he sells the house, his basis reflects any money he's<br>invested in the house. Makes his gains smaller for tax purposes (US),<br>but also allows him to really get a handle on what he's doing with the<br>house. What this doesn't do is make any record of increased market
<br>value. I think that gets too complicated as you'd have to call it income<br>and that could get really screwy, although you could call it unrealized<br>gains maybe? IANAA.</blockquote><div><br>Yes, unrealized gains would be appropriate. The same as if you had gains in a stock.
<br></div><br><blockquote class="gmail_quote" style="border-left: 1px solid rgb(204, 204, 204); margin: 0pt 0pt 0pt 0.8ex; padding-left: 1ex;">my .02<br><br>A<br><br></blockquote></div><br><br clear="all"><br>-- <br>David Harrison, BAccS, CGA