What is Accrued (or Accumulated) Depreciation in Real Estate?

Accrued depreciation or accumulated depreciation is the total amount of depreciation that a property owner has claimed on his or her investment property.

When the property is sold, the accrued depreciation deductions must be reclaimed. Taxes must then be paid on that accrued depreciation. However, the tax savings you get from being able to deduct depreciation today from your income can be much greater than the costs of paying the taxes on the accrued depreciation when you sell the property.

Owners of investment real estate must claim depreciation deductions on their annual tax returns for their investment property. The IRS will hit you with taxes on the “recaptured” accumulated depreciation when you sell your property—even if you didn’t claim the depreciation deductions while you owned it. So if you own investment property, you should always claim your depreciation deductions.

For more information, see also the following entries:

• epreciation:
• :Internal Revenue Service:
• :Investment Property:
• :Real Estate:
• :Recapture:
• :Tax Return: