Free Tax Course

Chapter 12: Depreciation

In this Chapter 12 of free tax course, we discuss depreciation. In order to discuss depreciation, we first define different types of properties including real properties.

Definition of property and Real property

Property is something that you legally posses or own.

"Real" property refers to land and improvements on the land such as buildings.

Personal property is something you own other than land.

Property can be tangible (touchable, concrete) or intangible (NOT touchable such as "good will" or even a promise not to compete). Tangible personal property can range from building-moving tractors to a palm sized cell phone. For tax purposes, only property used in business or income producing activities is considered depreciate. This is also called a capital asset.

What is Depreciation?

Depreciation Deduction

Types of Property

What Can and Cannot be Depreciated

Depreciation Methods

Modified Accelerated Cost Recovery System (MACRS)


Property Classes and Recovery Periods



Looking for more IRS Deductions?