Depreciation Defined Depreciation is a decrease in the value of property over the time the property is being used. Events that can cause property to depreciate include wear and tear, age, deterioration, and obsolescence. You can get back your cost of certain property by taking deductions for depreciation. For example, you can take a depreciation deduction for equipment you use in your business or for the production of income. To determine if you can take a depreciation deduction for your property, you must be familiar with the types of property.
Property is either of the following.
Tangible Intangible Tangible Property Tangible property is property that you can see or touch. There are two main types of tangible property. Real property Personal property Real property. Real property is land, buildings, and generally anything built or constructed on land, growing on land, or attached to the land. Tangible personal property includes cars, trucks, machinery, furniture, equipment, and anything that you can see or touch, except real property.