What is Asset Depreciation?
Depreciation is the accounting recognition of wear, tear, or obsolescence of a fixed asset over its useful life. It's a tax-deductible expense that reduces your tax burden.
Depreciation Methods
Straight-Line
The simplest and most common method. Distributes cost evenly over useful life:
Annual depreciation = (Asset value - Residual value) / Useful life
Double Declining Balance
Applies a double rate to the book value. Ideal when assets lose more value early on:
Depreciation = Book value × (2 / Useful life)
Guatemala ISR Maximum Rates
| Asset Type | Annual Rate | |---|---| | Buildings & structures | 5% | | Machinery & equipment | 20% | | Vehicles | 20% | | Office furniture & equipment | 20% | | Computer equipment | 33.33% | | Tools & accessories | 25% |
Tax tip
Depreciation is a deductible expense that reduces your ISR tax base. Make sure to properly document the acquisition and value of your assets.