Depreciable property refers to tangible assets that have a limited useful life and can lose value over time due to wear and tear, obsolescence, or age. In the context of accounting and taxation, these assets can be depreciated, meaning that their cost can be deducted over a period of time as an expense.
Common examples of depreciable property include:
- Buildings and Structures: This includes commercial buildings, warehouses, and rental properties.
- Machinery and Equipment: Heavy machinery, manufacturing equipment, and tools used in operations.
- Vehicles: Cars, trucks, buses, and other vehicles that are used for business purposes.
- Furniture and Fixtures: Office furniture, lighting, shelving, and other fixtures used in a business.
- Leasehold Improvements: Improvements made to a leased property that benefit the lessee.
- Computers and Technology Equipment: Computers, servers, and related technology used in a business.
- Tools and Supplies: Specialized tools used in various industries.
Each of these assets must be used in a business or for the production of income to qualify for depreciation. It's also essential to understand that certain types of property, such as land, and intangible assets (like patents), are generally not considered depreciable. The specific rules and methods for calculating depreciation can vary based on accounting standards and tax laws in different jurisdictions.