How Rental Property Depreciation Works

Write-offs from depreciation can impact real estate investors’ taxes in significant ways, saving them hundreds to thousands of dollars per year. Real estate depreciation is defined as an income tax deduction that allows a taxpayer to recover the cost (or other basis) of a real estate investment. The depreciation is realized as a type of deduction that reduces the investor’s taxable income.

You should remember that rental property depreciable if the investor owns it (even with debt), it is used in the investor’s business or to produce income, the property has a ‘useful life’ (meaning it deteriorates over time), and this useful life is expected to last more than a year. Also, to be eligible for depreciation, the property cannot be put into service and disposed of in the same year. Also, land is not depreciable, and owners cannot deduct for land costs such as clearing, planting, and landscaping.

CONTACT US TODAY if you have any questions or need help with the preparation of your tax returns with rental property.

Sincerely,

Maryna Varabyova, CPA

(877) 677-3737

vm.acc4u@gmail.com