What is depreciation in property management?

What is depreciation in property management?

Depreciation in property management refers to the reduction in value of a property over time due to wear and tear, age, or obsolescence.

How is depreciation calculated for rental properties?

Depreciation for rental properties is typically calculated using the straight-line method, where the property's value is divided by its useful life.

What are the tax benefits of depreciation?

Depreciation can provide tax benefits by allowing property owners to deduct a portion of the property's value from their taxable income, reducing their overall tax liability.

Can I depreciate improvements made to the property?

Yes, improvements can be depreciated, but they must be capitalized and added to the property's basis before calculating depreciation.

What happens if I sell a property that has been depreciated?

If you sell a depreciated property, you may be subject to depreciation recapture, which means you could owe taxes on the amount of depreciation you claimed.