Key Insights into Depreciation

June 25, 2024

Key Insights into Depreciation

Here are some crucial insights into depreciation, particularly regarding business or rental assets.

When Does Depreciation Start?

Technically, depreciation begins not when you use an asset but when it’s ready and available for its intended purpose. For instance:

• A rental property begins depreciating when it’s available to rent, even if it hasn’t been rented yet.

• A farming tool is set to begin depreciation when you receive it, regardless of when you’ll use it.

• A business vehicle begins to depreciate when bought for business purposes, even if not driven yet.

Best Practices

To prevent any ambiguity, if a property is ready for rent, list it. For business vehicles, it’s ideal to drive them for business soon after purchase. This ensures there’s no question about their intent and use.

Assets That Are Vacant, Idle, or Standing By

Even if your asset is temporarily not in use, it doesn’t mean you stop claiming its depreciation. The continued depreciation applies to machines that are momentarily idle because of a lack of demand and to a vacant rental property while you search for tenants.

When Does Depreciation End?

Business and rental properties typically remain depreciable until you remove them from their designated use, often when you sell or dispose of them.

Are you a business owner that could benefit from our tax strategies?

Go ahead and click this link to discuss…

Woodbury Finance and Accounting, LLC has achieved positive results for its clients, but the successes of our top clients are not typical. Because past performance is not a predictor of future success, you may have more or less success depending on many factors, including your background, experience, work ethic, client base, and market forces. Additionally, at times we may discuss the law or new and pending legislation. Please know our understanding of it is constantly changing, and you cannot and should not rely upon these communications for legal, financial, or accounting advice. For the latest updates,

© 2024 Woodbury Finance and Accounting, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This email may only be used pursuant to our Terms & Use Agreement and Privacy Policy. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of 3450 N. Triumph Blvd or by email at [email protected].