Component Depreciation

Component Depreciation means:
dividing real estate improvements into various parts, such as the roof, plumbing, electrical system, and shell, and then depreciating each component separately for tax purposes. Component depreciation was eliminated by the 1981 Tax Act for acquisitions after 1980.

Example of Component Depreciation:

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Dana builds a shopping center. The $ 1 million total cost was spent on com-ponents with the useful lives indicated in the table below. Dana claims component depreciation on each part based on its estimated useful life.

See Depreciation in the United States Encyclopedia of Law and Depreciation in the World Encyclopedia of Law.