Land Improvement Depreciation

Land Improvement Depreciation refers to the reduction in value of enhancements made to a parcel of land, such as landscaping, paving, fences, and drainage systems, over time due to wear and tear, obsolescence, or other factors.

These improvements are considered tangible assets and can typically be depreciated for tax purposes over a specified useful life, usually 15 years. This depreciation allows property owners to recover the cost of the improvements through annual tax deductions, reflecting the asset’s declining value. For example, if a business invests $150,000 in paving a parking lot, it could potentially depreciate this amount over 15 years, resulting in annual deductions of $10,000.