Bonus depreciation is a tax incentive that allows real estate investors to depreciate the cost of certain qualified property investments more quickly than they would be able to otherwise.
What is Bonus Depreciation for Rental Properties?
Bonus depreciation is a tax incentive that allows real estate investors to depreciate the cost of certain qualified property investments more quickly than they would be able to otherwise. This can result in significant tax savings.
For rental properties, bonus depreciation allows landlords to deduct a percentage of the cost of eligible property in the year the property is placed in service. This includes things like appliances, furniture, and equipment that are used in the rental property.
To qualify for bonus depreciation, the property must meet certain requirements. It must be new, meaning it was never used before by anyone else. Additionally, it must have a depreciable life of 20 years or less.
The amount of bonus depreciation that can be taken varies based on the year in which the property was placed in service. In general, the bonus depreciation percentage is highest in the first year of service and decreases each subsequent year.
It's important to note that while bonus depreciation can provide significant tax benefits, it's always best to consult with a qualified tax professional to ensure that you're taking advantage of all available tax incentives in a way that's appropriate for your specific situation.
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