Is raw land purchased for potential future residential development eligible for depreciation?

Raw land purchased for potential future residential development is not eligible for depreciation because, in accounting and tax terms, land is considered a non-depreciable asset. Depreciation applies to tangible assets that have a finite useful life, such as buildings and equipment, which lose value over time due to wear and tear and obsolescence. Land, however, does not degrade in this manner; its value may actually appreciate over time depending on various factors such as location, demand, and market conditions.

Since land does not follow the same depreciation rules as other real property improvements, it is important for real estate investors and owners to understand this distinction when planning their investment strategies and tax implications. This also helps clarify that the potential for future development does not change the inherent characteristics of the land itself regarding depreciation.