Non-depreciable assets are long-term business assets, like land, investments (stocks/bonds), collectibles (art/coins), inventory, and certain intangibles (brand names), that don't lose value over time or are treated differently for tax purposes, unlike depreciable items (buildings, machinery) that decrease in value and can have their costs expensed over their useful life. These assets either hold or potentially increase their value, meaning their cost is typically recovered when sold, not through annual depreciation deductions.
You can't claim depreciation on property held for personal purposes. If you use property, such as a car, for both business or investment and personal purposes, you can depreciate only the business or investment use portion. Land is never depreciable, although buildings and certain land improvements may be.
Examples of Non-Depreciated Assets
Land. Investments and other intangible assets. This could refer to stocks, bonds, franchises, goodwill, or agreements not to compete. Collectibles, such as coins, cards, and similar memorabilia.
All depreciable assets are fixed assets but not all fixed assets are depreciable. For an asset to be depreciated, it must lose its value over time. For example, land is a non-depreciable fixed asset since its intrinsic value does not change.
Land, investments such as stocks and bonds, and inventory are examples of non-depreciable assets. These assets retain their value or appreciate over time and are not subject to traditional depreciation.
Rules of depreciation
Your accountant can provide you with some guidance, but a useful rule of thumb is: Plant and machinery — expense around 15% - 20% of the overall value a year, with a full write-off over 5 to 7 years.
What Can't You Depreciate?
The four methods for calculating depreciation include straight-line, declining balance, units of production and sum of years digits (SYD). The best depreciation method for a company to use depends on its accounting needs, types of assets, size and industry.
The lists of things that do not depreciate but increase in value are antique artifacts, gold, diamond, land and rubies. These things do not depreciate as they are scarce and are available in limited quantities.
The Porsche 911 is the least-depreciating production vehicle in America. After three years, some models retain over 90 percent of their original MSRP.
Examples of Fixed Assets
Electronics, fashion, cars, and vacation timeshares can all lose their value rapidly in the first year that you own them. Because you won't make much money selling them, it is smart to hang on to these items for as long as they work and you wish to use them.
Keep in mind that land is a fixed asset that isn't subject to depreciation as it isn't expected to lose value over time.
Expensing an item may bring in more money in the short term, but once you have expensed it, it does not qualify for write-offs on future tax returns. Depreciating an asset may result in less money upfront, but could result in fewer taxes owed in the future.
It then explains 8 different depreciation methods - straight line, sinking fund, sum of years digits, declining balance, double declining balance, working hours, constant unit, and output.
These assets can be used for a long time (normally more than one year). This includes items such as tools, computers or books. The cost of buying a depreciating asset is capital expenditure, and you can't claim a deduction for the cost under normal deduction rules (known as the general deductions provisions).
A 20% depreciation rate means an asset loses 20% of its value (or cost basis) each year, commonly seen in the straight-line method for a 5-year asset, but 20% also reflects a recent phase-down of bonus depreciation under the TCJA before 100% was restored for 2025+; it can also refer to specific tax credits for historic rehabilitation or the permanent 20% QBI deduction for pass-through businesses.
Key Points. SMLLCs can depreciate business property under MACRS, claim Section 179, and bonus depreciation, subject to the same rules as other businesses. For disregarded entities, depreciation is claimed by the owner on their individual return. Depreciation reduces taxable income, lowering federal tax liability.
Most intangible assets are not treated as depreciating assets, even though they may otherwise meet the basic requirement to be one. Intangible assets include property, assets and rights that are not physical or financial assets but may be controlled for use in commercial activities.
Unlike ordinary repairs and maintenance, which are deductible in the year they're incurred, capital improvements are depreciated over time, typically across 27.5 years for residential properties unless a cost segregation is used.
Test 1 – asset costs $300 or less
To claim the immediate deduction, the cost of the depreciating asset must be $300 or less. The cost of an asset is generally what you pay for it (the purchase price), and other expenses you incur to buy it – for example, delivery costs.
Whenever you make a business purchase that you will use for more than one year, the Internal Revenue Service (IRS) requires it to be depreciated. This means writing off the cost on your business taxes over time (rather than the year when you purchase it).