Illinois Real Estate Exam Practice Question
For tax purposes, a 4-unit apartment building purchased in 1992 must be depreciated using which of the following depreciation methods?
Correct Answer: A
Rationale: For a 4-unit apartment building purchased in 1992, the straight-line method is mandated for tax purposes under the Modified Accelerated Cost Recovery System (MACRS). This method allows for even depreciation over the asset's useful life, which for residential rental properties is typically 27.5 years.
Option B, variable, is not a recognized method for real estate depreciation. Option C, accelerated, while applicable in some contexts, is not suitable for residential properties under MACRS. Option D, passive, refers to a type of income rather than a depreciation method. Thus, straight-line is the appropriate choice for this scenario.
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