Depreciation

Depreciation is the decrease in a property's value over time, or a tax deduction investors take for the wearing out of an income property.

What Depreciation means

Homes can lose value from market declines, deferred maintenance, or obsolescence. For investors, depreciation is also an accounting deduction that shelters rental income, recaptured at sale. The two meanings differ by context.

Florida example

A Florida rental owner deducted annual depreciation on the building to reduce taxable rental income, while separately watching that local values were appreciating, not depreciating.

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