Can Depreciation be Deducted from Rental Income in Calculating Child Support Payments?

A recent court decision has suggested it cannot.  In Asfaw v. Wolderhan, support was sought for two minor children.  The father averred that he had rental income of $384,000 per year with expenses of $357,000 of which $57,000 was depreciation leaving just $27,000 of net income.  Though the trial court found the depreciation allocation to be legitimate, the appellate court overturned this decision citing legislative history, legislative intent, and the treatment of depreciation in other states.  The court remanded the case to the lower court so that the depreciation expenses could be excluded and the support payments recalculated.  Although this is a complex and potentially open, debatable issue, this court decision suggests that depreciation cannot be excluded from income.  Contact Sagaria Law today to schedule an initial consultation so that you an learn more about how depreciation affects child support payments.