What kind of property is considered depreciable?

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Depreciable property refers to assets that can lose value over time due to wear and tear, obsolescence, or age and are used in a business or income-generating activity. For property to be considered depreciable, it typically must be used for business purposes, have a determinable useful life, and be expected to last more than one year.

Business-use property with a useful life of more than one year qualifies as depreciable because it is utilized in a trade or business to generate income. This type of property includes machinery, equipment, buildings, and vehicles that are not intended for personal use but rather directly contribute to the operation and income of a business.

The other options do not meet the criteria for depreciable property. Residential real estate used as a primary residence, for instance, does not qualify for depreciation deductions because it is not utilized for business purposes. Similarly, investment property held for less than a year is not eligible for depreciation as it does not have a sufficiently long useful life. Lastly, personal-use property is excluded from depreciation deductions since it is not employed in a business or for the production of income.

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