How Residential Depreciation Works
The IRS lets you depreciate residential structures (not land) over 27.5 years on a straight-line basis. A $300K building depreciates ~$10,900/year as a tax deduction.
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Cost Segregation
An engineered study reclassifies portions of the property into 5/7/15-year asset lives, accelerating early-year deductions dramatically. Pencils out on properties worth $250K+.
Depreciation Recapture
When you sell, accumulated depreciation is 'recaptured' at up to 25% tax. 1031 exchanges defer this; step-up in basis at death eliminates it entirely.