--- title: Do I Need to File IRS Form 4562? description: When an investor buys an investment property or asset, the IRS allows the investor to take an annual depreciation expense. The investor needs to let the IRS know that depreciation is being taken on the property or properties each year. We'll describe the form to use and when investors should use it. image: https://www.realized1031.com/hubfs/Images/photo/abstract/suit-form-pen-IS-840632770.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Do I Need to File IRS Form 4562? Posted Oct 1, 2024 ![suit-form-pen-IS-840632770](https://www.realized1031.com/hs-fs/hubfs/Images/photo/abstract/suit-form-pen-IS-840632770.jpg?width=753&name=suit-form-pen-IS-840632770.jpg) When an investor buys an[ investment property](https://www.realized1031.com/glossary/investment-property) or asset, the IRS allows the investor to take an annual depreciation expense. The investor needs to let the IRS know that depreciation is being taken on the property or properties each year. We'll describe the form to use and when investors should use it. ### What Is Form 4562? Form 4562 is titled Depreciation and Amortization. This form is used for annual depreciation or amortization of property or assets. A depreciable asset is a large purchase with a life spanning more than one year. Printer paper and pens don't fall into this category and neither does inventory. We're talking about larger purchases such as property, vehicles, or machinery.  ​​For example, if you own a business vehicle, the IRS says it has a useful life of five years. So you depreciate this 5-year property each year for five years. The IRS defines the amount of annual depreciation that can be expensed over an asset's useful life. The following shows the number of years different assets can be depreciated. - Residential rental property — 27.5 years - Non-residential real property (i.e., commercial property) — 39 years - Office furniture — 7 years - Autos and trucks — 5 years By dividing the asset's price by its useful life, you get annual depreciation. For example, an investment property purchased for $400,000 has annual depreciation of: 400,000 / 27.5 = $14,545.45 Or you can divide one by the number of years to get the annual depreciation rate: 1 / 27.5 = 3.636% x 400,000 = $14,544 Form 4562 is required for the first year that a depreciable asset is placed into service. If no new assets have been placed into service in subsequent years, Form 4562 is not required unless you file Form 1120 (corporate tax return). Form 4562 must also be filed for each asset. Form 4562 has six parts, which we’ll cover next. #### Part I: Section 179 deductions [Section 179](https://www.realized1031.com/blog/can-you-claim-a-section-179-deduction-on-rental-property) is used for assets where you can take full depreciation. If there is a depreciation overflow of an item because you couldn't deduct it all in the first year, Form 4562 must be used for each year that the depreciation is taken. Section 179 allows you to make a full depreciation in one year up to $1,050,000. #### Part II: Special depreciation allowance This section is only used for qualified properties such as a farm or if green technology was purchased for a business. This section can get complex and should be filled out with the assistance of an accountant. #### Part III: MACRS depreciation Unlike Section 179, this section is used with[ Modified Accelerated Cost Recovery System](https://www.realized1031.com/blog/what-is-a-section-1250-property#sts=MACRS) (MACRS) guidance if you depreciate property over multiple years. Like Part II, it can get complicated. So it's best to utilize your accountant for this section. #### Part IV: Form summary Some IRS forms summarize what's in the form at the beginning. Form 4562 puts it basically in the middle. #### Part V: Listed property This is a property that is used for personal and business use. #### Part VI: Amortization For those who are choosing to amortize their assets, list them here. ### Who Should Use Form 4562? If you depreciate an asset or property in one year (Section 179) or over many years, Form 4562 should be used. Form 4562 is not required if you used the mileage deduction for a vehicle rather than depreciation. Instead, use Section 4 of Schedule C. Depreciation is a complex topic that offers investors sizable tax benefits. Unlike other expenses, depreciation is a paper expense. Meaning it doesn't impact cash flow. Because of the complexity involved in depreciating assets, it's best to work with an accountant when filling out Form 4562. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. Examples shown are hypothetical and for illustrative purposes only. Learn Ways to Help Reduce or Defer Taxes [![Learn Tax-Deferred Strategies](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-Tax-ebook-250b.png?width=250&height=295&name=IPWM-Tax-ebook-250b.png "Discover ways to potentially ...") ](https://www.realized1031.com/blog/do-i-need-to-file-irs-form-4562#blogform) Download eBook ---   --- ### Learn Tax-Deferred Strategies ![Learn Ways to Help Reduce or Defer Taxes](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-Tax-ebook-550a.jpg?width=550&height=600&name=IPWM-Tax-ebook-550a.jpg) Discover ways to potentially grow wealth by managing taxes. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "When an investor buys an investment property or asset, the IRS allows the investor to take an annual depreciation expense. The investor needs to let the IRS know that depreciation is being taken on the property or properties each year. We'll describe the form to use and when investors should use it. What Is Form 4562? Form 4562 is titled Depreciation and Amortization. This form is used for annual depreciation or amortization of property or assets. A depreciable asset is a large purchase with a life spanning more than one year. Printer paper and pens don't fall into this category and neither does inventory. We're talking about larger purchases such as property, vehicles, or machinery. For example, if you own a business vehicle, the IRS says it has a useful life of five years. So you depreciate this 5-year property each year for five years. The IRS defines the amount of annual depreciation that can be expensed over an asset's useful life. The following shows the number of years different assets can be depreciated. Residential rental property — 27.5 years Non-residential real property (i.e., commercial property) — 39 years Office furniture — 7 years Autos and trucks — 5 years By dividing the asset's price by its useful life, you get annual depreciation. For example, an investment property purchased for $400,000 has annual depreciation of: 400,000 / 27.5 = $14,545.45 Or you can divide one by the number of years to get the annual depreciation rate: 1 / 27.5 = 3.636% x 400,000 = $14,544 Form 4562 is required for the first year that a depreciable asset is placed into service. If no new assets have been placed into service in subsequent years, Form 4562 is not required unless you file Form 1120 (corporate tax return). Form 4562 must also be filed for each asset. Form 4562 has six parts, which we’ll cover next. Part I: Section 179 deductions Section 179 is used for assets where you can take full depreciation. If there is a depreciation overflow of an item because you couldn't deduct it all in the first year, Form 4562 must be used for each year that the depreciation is taken. Section 179 allows you to make a full depreciation in one year up to $1,050,000. Part II: Special depreciation allowance This section is only used for qualified properties such as a farm or if green technology was purchased for a business. This section can get complex and should be filled out with the assistance of an accountant. Part III: MACRS depreciation Unlike Section 179, this section is used with Modified Accelerated Cost Recovery System (MACRS) guidance if you depreciate property over multiple years. Like Part II, it can get complicated. So it's best to utilize your accountant for this section. Part IV: Form summary Some IRS forms summarize what's in the form at the beginning. Form 4562 puts it basically in the middle. Part V: Listed property This is a property that is used for personal and business use. Part VI: Amortization For those who are choosing to amortize their assets, list them here. Who Should Use Form 4562? If you depreciate an asset or property in one year (Section 179) or over many years, Form 4562 should be used. Form 4562 is not required if you used the mileage deduction for a vehicle rather than depreciation. Instead, use Section 4 of Schedule C. Depreciation is a complex topic that offers investors sizable tax benefits. Unlike other expenses, depreciation is a paper expense. Meaning it doesn't impact cash flow. Because of the complexity involved in depreciating assets, it's best to work with an accountant when filling out Form 4562. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. Examples shown are hypothetical and for illustrative purposes only.", "articleSection" : [ "Tax" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2024-10-01T23:02:26+0000", "datePublished" : "2024-10-01T23:02:26+0000", "description" : "When an investor buys an investment property or asset, the IRS allows the investor to take an annual depreciation expense. The investor needs to let the IRS know that depreciation is being taken on the property or properties each year. We'll describe the form to use and when investors should use it.", "headline" : "Do I Need to File IRS Form 4562?", "image" : { "@type" : "ImageObject", "height" : 502, "url" : "https://f.hubspotusercontent10.net/hubfs/733513/Images/photo/abstract/suit-form-pen-IS-840632770.jpg", "width" : 753 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/do-i-need-to-file-irs-form-4562", "name" : "Do I Need to File IRS Form 4562?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://f.hubspotusercontent10.net/hubfs/733513/Images/photo/abstract/suit-form-pen-IS-840632770.jpg" } ```