ABSTRACT
Depreciation only exists as a means of reducing the income taxes businesses are obligated to pay to the U.S. federal and state governments since income taxes are paid on the net income of a firm minus business expenses and depreciation. Individuals owning rental property are able to depreciate it and deduct the yearly depreciation from the income earned on the rental property or other income since rental property is considered to be a business asset by the Internal Revenue Service (IRS).
