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You can choose from several life insurance policies with great care by keeping in mind your insurance needs to be able to achieve your objectives in an effective manner. There are several insurance options which offer different types of benefits on the policy depending on your needs. You can compare these options and find out which one meets your needs in the best possible manner. It is also important to work out your insurance needs properly before you can begin with a search for the perfect insurance policy. Your life insurance needs depend on a number of factors and your age, income, assets and liabilities are just some of them. The size of your family and the investment you already have made should also count when it comes to making the correct choice. Although, the death benefit a policy offers should replace the income of the deceased and help to sustain the dependents in an effective manner, you should also consider the aspiration of the family while determining your need. Then again, if you are looking for immediate coverage there is instant term life insurance to meet your need, otherwise you should go for traditional type. You can get life insurance quotes on the website of the insurer and compare them to find the best option based on insurance rates, features and amount of coverage offered on the policy. It is important that the amount of coverage on your policy is good enough to meet the needs of your dependents at the outcome of the policy. You can calculate the amount of coverage with the help of online estimation tools available with leading insurance websites.

Experts suggest that you should cover for at least 5 to 10 times your annual income but it would be better to calculate your own amount of coverage with the help of relevant factors. This would help make sure that your policy would be able to fulfill the needs of your dependents. If there are any special needs for your dependents at the outcome of the policy, it is better to take them into account as well while deciding the amount of coverage on your policy. One must keep in mind that your insurance policy offers lower life insurance rates for the right amount of coverage or you may have to reconsider the insurance policy.

What if the life insurance rates for your chosen policy is higher than you would like it to be? The best thing that you can do is to have a thorough look at your own underwriting profile and see that if there is any scope for improvement there. Remember, your life expectancy is a key factor in determining the life insurance rates. Try to improve it to get better rates and at the same time, each insurer has a separate set of underwriting guidelines and so if your underwriting profile does not match with the requirement of one, it will definitely match with some other.

These underwriting guidelines serve as a kind of eligibility criteria for the insurance buyer and help to decide his life expectancy. You can also judge your own life expectancy with the help of online tools provided by leading insurance websites, but know that it basically depends on your age, health condition and lifestyle. However, most of the policies expect the clients to undergo a paramedical test so that the insurer can have a clear idea about the client’s longevity and fix the rates accordingly. On the other side, there is also life insurance no exam, which is three times more expensive, but provides instant coverage.

One can also consider buying special insurance options which present a much better opportunity than life insurance no exam option to make an intelligent life insurance investment. These options are offered by specialized insurers to people suffering from a specific health condition based on the assessment of the severity of the condition. Unlike life insurance no exam option, this is not an instant term life insurance option but offers greater benefits which make the investment worth it.

It is also important to note that as life proceeds in its own path your life insurance needs too are going to change. Therefore, you should reassess your needs periodically and buy additional coverage if the occasion arises. Moreover, you should also be sure of the financial status of your insurer. You should always check out the market ratings of the insurance carrier before you buy a single policy from them. These ratings are based on the evaluation of their market performance and capital worth and assigned by independent accreditation agencies. You can generally rely on them.

Rental property depreciation is a highly important concept for those who own or manage rental properties. Understanding how to calculate it is crucial for maximising your tax deductions and slashing your overall real estate taxes.

So what exactly is rental property depreciation? In simple terms, it’s the decrease in value of property over time as the building structure begins to wear and tear with age.

Depreciation can only be used for tax purposes on rental properties; you cannot claim depreciation for the home that you live in. It’s also important to note that rental property depreciation only applies to the building itself, and not the land upon which it is situated.

How to Calculate Depreciation for Non-Residential Rental Properties

There are a few different methods for making this calculation, however the most common and straightforward method is the so-called “straight line” depreciation method. Using this formula, annual depreciation is calculated by taking the purchase price of the building minus land value, and dividing it by its useful life span.

When it comes to the useful life span of the structure, you’ll need to refer to tax rules and local regulations. Laws vary, but generally you can find a fixed number based on the type and age of the structure, or a formula to calculate the building’s life span.

As an example, say you purchase a property for $150,000 with a land value of $50,000, and the property has a useful life span of thirty years, according to local laws. Annual depreciation is as follows:

150,000 – 50,000/30 = 3,333.33

Of course, it’s important to note that the land value may change according to market conditions. Therefore, you will need to calculate rental property depreciation independently each tax cycle.

The above formula applies to non-residential rental properties, like hotels, motels, and business rentals.

How to Calculate Depreciation for Your Residential Rental Properties

If you own residential rental buildings or rent out your home, then you need to calculate rental property depreciation using the same formula, but the useful life span of the building is assumed to be 27.5 years. This calculation should be used for any home or residential rental building earning 80% or more of its revenue from rental income.

For the first year that you own a rental property, depreciation should be calculated using a pro-rated formula, depending on the month in which you purchased your property. Pro-rated depreciation is calculated as follows:

Annual Depreciation = Purchase Price – Land Value X Depreciation Percentage

Use the following table to calculate residential depreciation:

January 3.485% February 3.182% March 2.879% April 2.576% May 2.273% June 1.970% July 1.667% August 1.364% September 1.061% October 0.758% November 0.455% December 0.152%

For example, for a residential property purchased in November for $150,000 with a land value of $50,000, depreciation for the first year is as follows:

(150,000 – 50,000) X 0.00455 = 455

How Rental Property Depreciation Affects Your Real Estate Taxes

In the short term, depreciation can be counted on your annual tax return as a rental expense, resulting in a deduction from taxes owed. If you did not know that this option was available and thus did not claim this deduction in years past, you should know that you can claim up to 3 years prior depreciation on one return.

When you sell your rental property, you should also be aware that having claimed rental property depreciation on your tax return will result in higher capital gains taxes. In addition to being taxed on any profit from the sale of your property, you’ll also have to pay 1/4 of the amount that you have claimed in deductions for depreciation of the property.

Overall, you still benefit monetarily from claiming the deduction, however you may want to set aside some of the offset for the future in case you should decide to sell your rental property.