In real estate, Depreciable Life is a tax term that refers to the period of time over which a property or asset is allowed to be depreciated for income tax purposes. It represents the number of years the IRS assigns to an asset to recover its cost through annual depreciation deductions, based on the asset’s expected useful life as defined by tax regulations rather than its actual physical longevity.
For real property, depreciable life is determined by federal tax law and varies by property type. Residential rental property is generally depreciated over 27.5 years, while commercial property is depreciated over 39 years. Depreciable life applies only to the income-producing portions of real estate (land itself is not depreciable) and plays a key role in calculating taxable income and investment returns.
