Depreciation (rental)

Depreciation — the annual deduction for a rental building’s wear: the structure (never the land) written off straight-line over its useful life, commonly 20–25 years — i.e., 4–5% of building cost per year, deducted in cash you never spend. Combined with loan interest, it’s why a cash-flowing leveraged rental can show near-zero taxable income under the graduated regime — and worth nothing under the 8% option, which ignores deductions entirely. That asymmetry drives the annual crossover computation in lesson 3.10.

First used in: 3.10 · RE tax and structures