Real estate info & tips: What Is Included In The Selling Price? Depreciable Property Three conditions must be met before the depreciation tax deduction is allowed. Generally, depreciable property meets the following criteria:
1. It is a capital expenditure in depreciable property, that is, not inventory, land, etc.; and
2. It is used in a trade or business or held for the production of income; and
3. It has a definite useful life of more than one year. Depreciation—A method of matching income and related expenses, depreciation recognizes the decrease in value caused by wear and tear, outdated interior improvements, and neighborhood problems. Land itself may never be depreciated, only the improvements.