This is the first question many people have when dealing with fixed assets. What property am I allowed to depreciate?
Well, depreciation is basically a deduction for capital expenditure. It is considered a reasonable allowance for the wear and tear of assets used in a trade or business or for the production of income.
Property is eligible for depreciation if meets all these conditions:
- It is used for business or held for production of income.
- It has a useful life exceeding one year.
- It wears out or loses value over time.
Property is not eligible if:
- The property has one year or less expected useful life. This property can be deducted as current expenses in the year it is purchased.
- The property disposed in the same year it is purchased.
Now I hope that gives you a better understanding of what you can depreciate. If you have any questions about specific property, leave them in the comments.
More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.