Depreciate Building and Contents
One way to make money on your property is to depreciate the building and some of the contents. Calculating wear and tear on your property is a strategy to reduce the amount you owe in taxes. It saves you money indirectly, but shouldn't be overlooked. To keep on the right side of Uncle Sam, however, you have to follow the rules exactly.
Don't confuse depreciation and deductible business expenses. Depreciation occurs over a period of years. Currently the items you can depreciate for wear and tear are:
Computers and other capital investments (improvements) — 5 years
Appliances, carpets, window coverings — 7 years
Landscaping, paving, outdoor lighting — 15 years
Residential buildings — 27.5 years
Deductible expenses that you can enumerate on Schedule E (Form 1040) Supplemental Income and Loss include: advertising, auto and travel, cleaning and maintenance, commissions, insurance, legal and other professional fees, management fees, mortgage interest paid to banks, other interest, repairs, supplies, taxes, and utilities.
Tax laws change frequently, however, and to be safe when using depreciation, you should check with an accountant.
