Depreciation Tax

Definition of "Depreciation (tax)"

Jimmy Grappone
Jimmy Grappone ENGEL & VĂ–LKERS

Allocation of the cost of fixed assets, such as plant and building, over the life of the asset. Depreciation is due to physical use and/or obsolescence. Depreciation reduces taxable income, but does not reduce cash. The two depreciation methods allowable on the tax return are straight-line and modified accelerated cost recovery system (MACRS). Under the straight-line method, depreciation is the same amount each year. Under MACRS, each item of property is assigned to a property class. The property class establishes the depreciation time period.

Have a question or comment? We're here to help.

*** Your email address will remain confidential.

Search Real Estate Terms

Popular Real Estate Terms

Popular Real Estate FAQ