Depreciation question in regards to damages or repair.

[Landon Elscott]

Well, I've been snooping around on here for awhile and am in the process of learning everything I can know and being completely prepared as I make the transition into becoming a landlord. I haven't purchased anything yet or even made an attempt to, and am just learning the laws, tips and tricks, and trying to find what I feel will be a good investment using the information I've read here.

I understand the concept of depreciation; however, I'm a bit confused in terms of how it applies to tenant damages. For instance, tenants are required by law to only pay damages based upon the remaining life that the particular object has. So if a carpet has a life span of 7 years, and a tenant damages carpet with 3 years left on it, I can only assign them damages for those 3 remaining years.

But what about a situation where the carpet may have already fully depreciated, but in reality is still in really great shape. For instance, when I first got married, my wife and I rented an older farmhouse. The carpet was about 10 years old in one of the rooms and obviously outdated in style, but it was very well kept up and was in better condition than many of the other properties we looked at with carpet only 5 years old. That particular room had served as a formal dining area, and I'm assuming tenant probably rarely used it.

I would never have considered damaging the carpet, but what would have happened if my dog were to have chewed it up or if another tenant were to damage it in that property or any other that someday I may own. I mean, by all considerations the carpet was in excellent condition but would have technically past its lifetime and therefore seems to me as though it could be debated as to if a tenant were liable for any damages, under the provision that their damages would be less the amount that the carpet depreciated.

Say the carpet cost $500 when it was brand new and had a life of 5 years. Each year it depreciated $100 under straight line depreciation. So on the 6th year, if the tenant damages the carpetting, they'd be liable for $500 but then minus $500 from the 5 years of depriciation, meaning they wouldn't be liable for anything.

I appreciate all the help, including that from all the other posts I've been snooping on!!!