Real Estate Depreciation Deduction

In the US tax code, a depreciation deduction can be taken on rental properties, calculated by dividing the building's value by 27.5 years for single-family homes or 39 years for commercial buildings. For a $200,000 building value, this results in a $7,200 annual deduction.

Single-family rental properties can be depreciated over 27.5 years, and commercial properties over 39 years, allowing for annual tax deductions based on the property's value (excluding land).

For single-family homes, the IRS allows depreciation deductions by dividing the property's value (excluding land) by 27.5 years.

Explains the depreciation deduction in real estate as a tax write-off, allowing investors to legally reduce taxable income.

Real estate investors can deduct a portion of the building's value (depreciation) annually over 39 years, creating a tax loss.

A $1 million property may qualify for a $25,000 annual deduction for approximately 30 years due to depreciation.

Real estate investors can claim a depreciation deduction annually on the value of the building (not the land), which can be deducted from income, even if the property's market value is increasing. This deduction is spread over the asset's useful life (e.g., 39 years for commercial buildings).

Commercial buildings can have 39-year straight-line depreciation, allowing a deduction of approximately $20,000 annually on an $800,000 building value.