If you own a business or an investment property, then tax depreciation is one of the tax breaks you’re entitled to. You have fixed assets treated as capital investments – buildings, equipment, furnishing, business-related vehicles – and depreciating those assets is a common way to obtain tax benefits. Depreciated properties are written off in the form of annual depreciation expense, a deductible expense used for income tax purposes.
Generally, depreciation is used to generate tax deductions and defers tax payments. However, there are some common myths associated with the rules of claiming a tax depreciation deduction. In this article, we debunk some of them.