Depreciation Applies to Buildings and Capital Improvements
Depreciation benefits apply only to the improvements on the land (such as buildings, structures, utilities, and other fixed assets), not the land itself. Owners can recover the cost of these improvements over time through annual depreciation deductions on their tax returns.

• Land cannot be depreciated, but structures and site improvements can
  
• Improvements must have a determinable useful life and be used in a business or income-producing activity
  
• Examples include warehouses, paved areas, fencing, and utility infrastructure
  

Depreciated Over IRS-Defined Recovery Periods
The IRS assigns standard recovery periods depending on the type of asset and its use. Most commercial or industrial property improvements follow the Modified Accelerated Cost Recovery System (MACRS).

• Commercial buildings: depreciated over 39 years (straight-line method)
  
• Land improvements (e.g., roads, sidewalks, parking lots): typically depreciated over 15 years
  
• Equipment or HVAC systems: may have 5–15 year schedules depending on classification
  

Provides Ongoing Tax Deductions and Investment Returns
Depreciation creates a non-cash expense that reduces taxable income, increasing the investor’s after-tax return. It also contributes to cost segregation strategies, where components are broken down to accelerate depreciation.

• Annual depreciation deductions reduce current-year tax liability
  
• Bonus depreciation or Section 179 expensing may apply to certain improvements
  
• At sale, depreciation recapture tax may apply on gains related to previously claimed depreciation