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Can I Claim Depreciation For All Types Of Property



Business owners often purchase property such as equipment, furniture, vehicles or even real estate to assist with the development of their companies. According to U.S. tax law, a business owner can claim a tax deduction for the amount that your initial investment in a property depreciates over time.

Depreciation is a useful tax tool because it is a part of your overall net income. For instance, it is said that a car loses almost half its value the moment it is driven off the lot. You spent $20,000 on something that is now only worth $10,000. Therefore, you took a loss of $10,000 with the purchase. By including depreciation on your tax return, your net income will show that loss.

While not all property depreciation is that severe, it can end up saving you thousands on your taxes. Keep in mind that people who do not file Schedule C tax returns cannot claim depreciation deductions on their taxes. A Schedule C is necessary to be a business owner in the eyes of the government.

Call a tax lawyer today if you want to go through your company's assets and determine the deduction you can claim on your taxes.

Eligible Types Of Property

Nearly all property can be claimed in Form 4562 for Depreciation and Amortization. Property tends to fall into two categories:

  • Real Property - including any buildings on or attached to land
  • Personal Property - including nearly everything else such as vehicles, equipment, furniture, etc.

It is important to note that land does not count as real property. According to depreciation law, the depreciation in the price of land is not a deductible expense.

How To Apply Depreciation

Keep in mind that if you use a piece of property for multiple uses, such as a car for both home and work or a home office as well as living quarters in the same building, you need to calculate the amount of time and space an object is used solely for work purposes. For instance, if your car is used for work 50 percent of the time, you can only take 50 percent of the depreciation deduction.

There are many different tables and forms for different types of property to calculate the depreciation in value. Contact your tax attorney today for specific information!