Archive of posts tagged depreciation

Depreciation of Rental Property

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Depreciation is a deduction to your income that allows you to recover the cost or other basis of property over the expected life of the property. It is an allowance for wear and tear or obsolescence of the property. In reality, the value of real estate property may not decrease at it allowed. So you get benefits by using depreciation against rental income and keep the property value at the same time. Keep in mind that depreciation is mandatory.

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Depreciation Recapture

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Depreciation reflects the recognition that certain assets  tend to lose value over time. The IRS generally allows you to categorize the “used up” value of your assets as an expense to offset ordinary income so that special rules should be in place to treat any future gain as well. Depreciation recapture rules have been there since the 1960s.

What is depreciation recapture?

Depreciation recapture doesn’t add to a taxable gain it’s a method of determining the tax treatment of any gain.

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