Direct answer
What does Tax depreciation mean?
A tax deduction that allocates the cost or other basis of qualifying property over a recovery period.
Exam cue: Land is not depreciated, and depreciation affects adjusted basis and possible recapture.
What does it look like in a question?
New York example
An owner depreciates the qualifying building portion of a rental property over the applicable recovery period.
Common exam trap
What should you not confuse it with?
Tax depreciation does not require the building's market value to be falling.
Related income tax terms
Adjusted basisOriginal basis increased or decreased by tax-law adjustments such as qualifying improvements and allowed depreciation.Amount realizedThe total value received on a disposition, adjusted for selling expenses and other items as tax law provides.BasisA tax measurement used to determine gain, loss, depreciation and other tax consequences for property.Capital gainGain from the sale or exchange of a capital asset, calculated under tax law and subject to classification and exclusions.Depreciation recaptureTax treatment that can recharacterize or specially tax part of gain tied to prior depreciation deductions.Like-kind exchangeA tax-deferred exchange under Internal Revenue Code section 1031 for qualifying real property held for investment or productive use in a trade or business.
Sources used2 references with section locators
The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.
- Real Estate Salesperson 77-Hour CurriculumNew York State Department of StateSupports: Exam scopeSection: Subject 17, Income Tax Issues in Real Estate Transactions
- Publication 946, How To Depreciate PropertyInternal Revenue ServiceSupports: Federal ruleSection: Property that can and cannot be depreciated
Keep learning
Put the term back into its full subject.
A definition helps with recall. The subject guide shows how the rule interacts with documents, scenarios, calculations and practice questions.