Investment Property Depreciation in Florida
Depreciation is a federal tax deduction that allows Florida investment property owners to recover the cost of their building over time, reducing taxable rental income without requiring cash expenditure. Since Florida has no state income tax, the benefit operates entirely at the federal level.
Depreciation Schedules
- Residential rental: 27.5 years (straight-line)
- Commercial: 39 years (straight-line)
- Land: Not depreciable
- Cost segregation: Reclassifies components to 5, 7, or 15 years
Example
$400,000 building value ÷ 27.5 years = $14,545 annual deduction
Depreciation Recapture (Section 1250)
- Taxed at maximum 25% upon sale (higher than standard capital gains)
- Equals total depreciation claimed during ownership
- Not deferrable through 1031 exchange in most cases
- Critical consideration when planning property sales
Cost Segregation
- Engineering study reclassifies components to shorter lives
- Accelerates deductions in early years of ownership
- Most cost-effective for higher-value properties
Related Terms
- Investment Property — Income-producing assets
- 1031 Exchange — Tax-deferred reinvestment
- Capital Gains — Sale profit taxation
Barnes Walker Investment Tax Planning
Barnes Walker’s real estate attorneys advise Florida investors on depreciation strategy and property disposition planning. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC