How To Calculate Depreciation On Rental Portfolios

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Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

How To Calculate Depreciation On Rental Portfolios

If you own a rental property and want to take advantage of the tax breaks one of the most useful tax tools at your disposal is depreciation. Rental property depreciation allows investors to write off the structure and improvements to the property over a period of time. This is non-cash expense that you can use as a write-off on your taxes. Depreciation is one of the biggest benefits to real estate investing because it can reduce reportable net income and therefore, your taxes

Depreciation is the loss in value to a building over time due to age, wear and tear, and deterioration. You can also include land improvements you’ve made and items inside the property that are not part of the building like appliance and carpeting. You can only depreciate the improvements to the structure itself — not the land.

Depreciation deductions are spread out over the useful life of a property. The IRS allows an owner to depreciate the value of the home over a 27.5 year period. The time periods of depreciation can be adjusted based on the components of the property which can offer even larger tax planning opportunities. We cover this in other articles here.

It is important for all real estate investors to deeply understand depreciation and how it applies to their portfolio. There are many tax planning opportunities available related to depreciation.

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Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.