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Updated on
March 16, 2024


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Real estate depreciation is the process by which the value of a property decreases over time due to wear and tear, obsolescence, or other factors. This can have a significant impact on real estate investors, as depreciation can affect the value of an investment property and the amount of income it generates.

There are two main types of real estate depreciation: physical depreciation and functional depreciation. Physical depreciation refers to the physical wear and tear on a property over time, such as roof repairs, painting, or other maintenance. Functional depreciation refers to the impact of changes in technology or market conditions on the value of a property, such as the obsolescence of an outdated heating system or the impact of new construction in the area.

Real estate investors may be able to claim deductions on their taxes for the depreciation of their investment properties. This can be an important way to offset some of the costs of owning and maintaining an investment property.

There are several factors that can affect the rate of depreciation for a particular property, including:

Real estate depreciation can have a significant impact on real estate investors, as it can affect the value and profitability of an investment property. It's important for investors to carefully consider the potential impact of depreciation when evaluating potential investment opportunities, and to factor it into their overall investment strategy.

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