What is Rental Property Depreciation? | Investing for Beginners

What is rental property depreciation? We're explaining it step-by-step in today's video.

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Depreciation is defined as a reduction in the value of an asset over time. In this video, I’m explaining why depreciation is one of the most powerful benefits of real estate investing.

Depreciation is important because it helps you keep more money in your pocket, instead of sending it off to the federal government at tax time. Depreciation is a fantastic way to mitigate your overall tax burden, so you’ll want to know exactly how it works.

This video contains a specific example of how to calculate depreciation, and how it works inside the current tax code. I’ll also discuss a way to elevate your depreciation strategy and discuss how raw land ties into this topic.

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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.

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[ColbyEasterling]

Trying to study for my re license. Found this video. This guy has the most soothing voice. That paired with the background music could about put me to sleep :D

[PocoMelons]

Damn, this saved me a lot to look over when trying to figure out my depreciation. Thank you for this.

[Living]

It’s important to note that when you go to sell property that you depreciated, any gain on the disposition is recaptured (included in income) as ordinary income up to the amount of the depreciation previously allowed or allowable for the property.

It may be a deduction now, but it will be taxable income later when you go to sell the property.

[madisonyang]

i am newly home owner and this is very helpful and i wanted to say thank you!!

[keithp]

First I would like to say that I love your videos. They are very very informative and I've gotten a lot out of them.
I just sold a rental property and contacted a CPA that's new to me. I explained that I needed to use them because of a special service they provide plus I needed regular tax filing. I explained that I just sold a rental property and she mentioned "depreciation recapture". She said that the depreciation that was written off during the time of the ownership of the property will have to be repaid.

Have you heard of this before?

Thank for your time and keep up the good work

[michelleferreira]

I have just found and subscribed to your videos after owning my 7 unit apartment building for the past 27.5 years. And can I just say OMG! WOW! THANKYOU!! My question is can I now RE- depreciate this property?

[MiguelG]

You explained that better than my professor 😂 thank you 😊

[bathysphere]

Which land value/property assessment year do you use to calculate the depreciation. The year that you purchased the property?

[Hayden-Health]

could not have been stated better!! Good stuff, keep it coming!

[bettyhahn]

Thank you for the video and for explaining it so simply!

[LoveConquersAll]

Wow. This is a great video.. Thanks so much im learning so much..

[mudmarble]

This is great news! We were able to find a lot of useful information here, Clayton. It will definitely help us as we continue to grow our real estate business.

[alanonsr]

recommend adding "for real estate investing" on the description. I need a video "for rental equipment" please

[duanner]

How do you figure out the value of just the house vs house and land? Also, I rent a basement apartment in my house. Would I use the same percentage I use for other expenses?

[Rayquesto]

Wow. You are the best. Really appreciate this video.

[rhjiotq]

How do you determine how much value to remove for the land portion of the asset?

[bthomas]

This tax advantage definitely favors areas with low land-to-building valuation ratios.

[NachiFREE]

Thanks for the breakdown! Greatly appreciated!

[Oldandnewmoneypodcast]

Brilliant love the way your plain stuff

[aaronhartmann]

do you have your house appraised every year to adjust depreciation?