What is amortization and how does it work?
by TurboTax•233• Updated 4 months ago
Many taxpayers are familiar with depreciation, which means deducting an asset's value over time, but fewer are familiar with depreciation’s cousin, amortization.
Amortization works like depreciation for intangible (non-physical) assets, like refinance expenses, goodwill, patents, and copyrights.
Unlike depreciation, there are no accelerated or bonus options. Amortized assets are deducted evenly across their useful life using the straight-line method.
Amortization commonly happens when you refinance your home and pay points, own a small business, or rent a property.
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