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What is Depreciation?
Depreciation is a type of tax deduction that helps you recover the cost of wear and tear of property used over multiple years. Except for land, most types of tangible property and assets are depreciable, from buildings and vehicles to equipment. Some intangible property is depreciable, too, such as patents, copyrights, and computer software. In general, you should own the property you are depreciating, and the property must be used for business or an income-producing activity. In most cases, you can either depreciate the asset over its life expectancy, or write it off as an expense and deduct the entire cost in the first year.