Basics of depreciation
As a business owner, you can normally deduct business expenses in the year you incur them, but the rule is different for property you buy that is expected to last more than one year, such as buildings, machinery and furniture. You can't deduct the full cost right away. Instead, you depreciate them, or deduct the cost gradually over a number of years. Property that doesn't wear out, such as land, can't be depreciated.
For many kinds of business property, including computers and cars, special "accelerated depreciation" rules allow you to deduct a bigger share of the cost early on, assuming that an asset will decline in value more in the early years of use. Other assets, such as buildings, are depreciated evenly using a method known as straight-line depreciation.
Now that we have covered the basics, let's look at how you may be able to get the most bang for your buck tax-wise out of your business assets.