A study allocates basis among the building, eligible personal property and land improvements. Land is not depreciable. Shorter-lived components may qualify for accelerated deductions when the relevant requirements are met.
Compare the study cost, usable deductions, passive-loss restrictions, state treatment and possible recapture on sale. Owning rental property does not by itself make someone a real estate professional or permit rental losses to offset wages.
An example
Hypothetical: a property owner obtains a supported allocation for eligible equipment and land improvements. The owner still needs to determine whether the resulting losses are currently usable before treating the accelerated deduction as a cash benefit.
Reviewed October 7, 2026. IRS reference ↗
This is a general reference. Discuss how the rules apply to your business with your tax professional.