Depreciation
A tax deduction that spreads the cost of a rental building, not the land, over its useful life, 27.5 years for residential rentals. Depreciation taken may be taxed when you sell.
Also called: tax depreciation, depreciation deduction, cost recovery
Related terms
What you paid for a property plus certain purchase costs and improvements, minus depreciation taken. It is subtracted from the sale price to figure your taxable gain.
Tax on the profit from selling an asset, based on the sale price minus your cost basis. Many homeowners can exclude part of the gain on a primary residence they have lived in long enough.
A federal tax rule that lets an investor defer capital gains tax by selling an investment property and buying another under strict timelines and rules. Talk to a tax pro first.
Real estate bought to rent to tenants for income rather than to live in. Lenders, insurers and tax rules treat it differently from a primary residence.