Can banks depreciate the value of homes....?

[HardDrive]

So a bank has thousands of unsold properties on the books. If they do nothing to maintain these homes, and the homes fall into disrepair, can the banks depreciate their losses? Can they depreciate the houses like a piece of equipement?

[kaisen]

They aren't "assets" to depreciate. They are liabilities, most likely. When they take the loss, it is a real loss on their books. Some of them can't afford to take the losses in terms of ratios.

If banks valued their foreclosure portfolios at real market values, they would be so insolvent as to lose their charters. No kidding.

[McLovin]

In a nutshell, when a bank takes back a property in foreclosure (i.e., actually forecloses on it, takes ownership on it), it is recorded on the bank's books as an asset.

As far as value on their books, in a nutshell, it is recorded at its fair market value minus costs of sale.

I don't think they can depreciate it, though, because it doesn't meet the accounting requirements of a "depreciable asset." (Not all assets can be depreciated),