Depreciation & Amortization in Real Estate Accounting
                     Depreciation & Amortization in Real 
Estate Accounting
Presented by Exo Edge
Introduction to Depreciation & Amortization
● Depreciation: The systematic allocation of the cost of a tangible asset over its 
useful life.
● Amortization: The gradual expensing of intangible assets over time.
● Why it matters: Helps property managers and investors allocate costs 
effectively, reduce tax liabilities, and maintain accurate financial records.
Depreciation in Real Estate
● Common depreciable real estate assets:
○ Buildings & structures (excluding land)
○ Property improvements (e.g., landscaping, lighting)
● Depreciation Methods:
○ Straight-Line Method: Equal expense allocation over asset life.
○ Declining Balance Method: Higher expenses in earlier years.
● IRS Guidelines: Residential rental property depreciates over 27.5 years, 
commercial property over 39 years.
Amortization in Real Estate
● Applied to intangible assets like:
○ Leasehold improvements
○ Loan fees & financing costs
○ Goodwill & trademarks (if applicable)
● Typically follows straight-line amortization over the asset’s useful life.
● Helps in financial planning and tax deductions.
Key Takeaways & Impact
● Depreciation & amortization help in tax savings and cost 
allocation.
● Understanding IRS regulations is crucial for compliance.
● Proper accounting ensures accurate financial reporting and 
investment decisions.
● Leverage technology & accounting software for efficient tracking.