Regarding real estate investment property, why would a seller report such a high replacement reserve?

What happens to the balance of the replacement reserve when selling income property? What percent of gross rental income is typically added to the replacement reserve account? Since the replacement reserve contributions in year 1 are tax deductible, are they tax deductible when used for actual repairs in year 2? Thanks for the help.

I am a commercial appraiser and deal with income producing regularly. A reserve for replacements is an essential part of being an investor. As far as a general percentage it really depends on what the reserves are used for. Savy investors place the reserve money in an interest bearing account and prospect when they believe an item will be at the end of it's useful life ie: $10,000 for boiler in 5 years. If they know interest rates are 5% and need 10k in five years the will budget $147.00 per month into the account for five years. If their gross rent per year is 50,000 then they will budget about 2-5% towards reserves. 147 x 12 = 1,764/50k = 3.53% As far as deductions you will have to speak eith an accountant.