This one is pretty simple. Depreciation is the decline in the value of property. According to Realestateabc.com it “is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.” So that’s all we have for today. A simple but very important term to know and understand.