Depreciation isn’t just an accounting rule.
It’s how the world admits that everything wears out.
Your equipment. Your buildings. Even your energy.

Although depreciation may seem complicated, it is important to understand the basics for your financial education and wellbeing.

I recently partnered with Elaine from Black Swan Real Estate to break down how depreciation impacts real estate on “Could 2025 Be a Landmark Year for Real Estate“

What Depreciation Actually Is

In simple terms, depreciation is how we spread the cost of something valuable over its useful life.

The IRS recognizes that tangible assets like buildings, equipment, and vehicles lose value with time and use.
So instead of taking one big deduction when you buy them, you take smaller deductions each year as the asset wears out.

That’s why depreciation is called a non-cash expense. You are not writing another check, but you still get to lower your taxable income.

For physicians, that concept alone is powerful. Whether it’s practice equipment or real estate, depreciation can quietly improve your after-tax returns without changing your cash flow.

The Biggest Opportunity: Real Estate Depreciation

Last week, Dr. Elaine Stageberg, founder of Black Swan Real Estate, shared an excellent guest post explaining how depreciation in real estate can turn paper losses into real, after-tax advantages.

Here’s the short version:

• The IRS lets you deduct part of a property’s value each year to reflect wear and tear.
• A cost segregation study separates components that can be depreciated faster.
• And with 100% bonus depreciation returning in 2025, investors can take those deductions immediately.

That means your cash flow can stay positive while your taxable income drops, one of the most powerful examples of productive depreciation in action.

Elaine’s team at Black Swan is hosting a short educational webinar on October 15th regarding their secure freedom fund that utilizes productive depreciation.

Depreciation Inside Your Practice

If you own your medical practice, you already live with depreciation even if you have never thought about it.

• Equipment and instruments are typically depreciated over 5 to 7 years.
• Office furniture and computers often fall into similar time frames.
• Leasehold improvements such as exam room renovations may be depreciated over longer schedules.

That means the tools you use to generate income also provide tax deductions that protect that income.
It is one of the few financial free lunches in medicine, assuming you track and plan for it correctly.

Work with your accountant to ensure every depreciable asset in your practice is on the books.
The goal is not aggressive loopholes but disciplined, accurate record-keeping that reflects the real wear and tear of doing business.

Relationship and Energy Depreciation

Depreciation does not just happen to assets.
It is a concept that can be applied to people and relationships.

Your energy, focus, and relationships lose value if you do not maintain them.
A piece of equipment that runs nonstop without service eventually fails.
So does a physician who never recharges or a relationship that never gets attention.

Just like in your practice, maintenance matters.
Rest, time off, and connection with the people who matter are not luxuries.
They are necessary investments that keep your most important asset producing returns (you!).

Your goals should not just be monetary, financial independence is meaningless without a healthy “you” and loved ones to enjoy it with. Part of becoming financial independent is also about sustaining the things that make life meaningful. That starts with protecting what quietly depreciates (yourself & relationships) when ignored.

Bottom Line

Depreciation is inevitable.
The question is whether it happens to you or for you.

• Cars depreciate and drain your wallet.
• Equipment depreciates but helps you earn.
• Real estate depreciates on paper but builds wealth.
• Relationships and energy depreciate unless you reinvest.

You cannot stop things from wearing out, you can only address them.