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So depreciation does not give one the same benefit as office supplies? All it seems to do for you is to lower your tax bill temporarily now, only to raise it later.

Does this tie into the fact that with office supplies you have an actual outlay of cash, but with depreciation you don't, and will get to sell the property some day?


Possibly, but I think you're trying to apply too much logic to tax law, which can leave nasty brick marks on your forehead. I'm not an accountant, but I think that depreciation is part of the expense, so it makes sense that it would be including in calculating income. I haven't looks at an income statement in years, but IIRC they do acknowledge that it's an "unusual" expense since there's a subtotal before applying depreciation.

On the practical side, the tax rate on recapture is capped at 25% while the deduction is at your marginal rate.

Phil
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