---
title: What is depreciation?
description: Depreciation is a reduction in the value of an asset (e.g. a property) over the course of time, usually due to “wear and tear.”
---

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# What is depreciation?

## A reduction in the value of an asset over the course of time.

Depreciation is a **reduction** in the value of an asset (e.g. a property) over the course of time, usually due to “wear and tear.” A borrower may depreciate their rental property or personal property used for a business on their tax returns. **We can “add back” depreciation when calculating qualifying income since it’s not a true expense.**

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