How many years can owners of residential and low-income investment properties depreciate their investment?

Owners of residential and low-income investment properties can depreciate their investments over a period of 27.5 years. This specific time frame is established by the IRS for residential rental properties, which allows property owners to recover their investment costing through annual depreciation deductions. This method contributes to reducing the overall taxable income generated by the rental property, thus providing a financial benefit to the property owner.

In contrast, other types of properties, like commercial real estate, have different depreciation periods, such as 39 years. This knowledge is essential for real estate investors planning their finances and tax strategies, as depreciation can significantly impact cash flow and tax liability. Understanding the correct depreciation period for residential properties helps ensure compliance with tax regulations while maximizing potential tax benefits.