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Rental Property Depreciation Calculator

Calculate your annual depreciation deduction using the IRS MACRS ? straight-line method.

Tip: Your county assessor's website shows the land/building split. Use that ratio instead of the default 20%.
Annual Depreciation Deduction
$10,182
$849/month

Tax Savings by Bracket

22% bracket $2,240/year saved
24% bracket $2,444/year saved
32% bracket $3,258/year saved

Schedule Summary

Depreciable Basis
$280,000
Useful Life
27.5 years
Depreciated to Date
$20,364
Remaining Basis
$259,636

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How Rental Property Depreciation Works

Depreciation is one of the most powerful tax deductions available to rental property owners. It allows you to deduct the cost of your building (not land) over its useful life, even though the property may be appreciating in value.

Key Rules

  • Residential rental property: Depreciated over 27.5 years using MACRS straight-line method
  • Commercial property: Depreciated over 39 years
  • Mid-month convention: In the first year, you can only claim a partial deduction based on the month placed in service
  • Land is never depreciable: You must separate the land value from the building value
  • Improvements get separate schedules: Each capital improvement starts its own 27.5-year clock

Cost Segregation: Accelerate Your Depreciation

A cost segregation study reclassifies certain building components (carpet, appliances, parking lots) from 27.5 years to 5, 7, or 15 years. With 100% bonus depreciation now permanent under OBBBA, this can create massive first-year deductions. Try our free cost seg estimator.

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Cost Segregation Estimator

Estimate first-year savings from reclassifying assets to 5, 7, and 15-year lives with bonus depreciation.

Passive Activity Loss Calculator

Your $25,000 rental loss allowance and MAGI phase-out, the Form 8582 way.

Frequently asked questions

What can I depreciate on a rental property?
You depreciate the building and certain improvements — not the land. Land does not wear out, so you must separate its value from the purchase price first; this calculator uses your land-percentage estimate to find the depreciable building basis. Closing costs and capital improvements can add to that basis, but personal-use portions cannot.
How long do I depreciate residential vs. commercial property?
Residential rental property is depreciated over 27.5 years and commercial property over 39 years, both using the IRS MACRS straight-line method. The calculator divides your building basis by the recovery period for your chosen property type to estimate the annual deduction. These recovery periods are set by the IRS and apply regardless of how fast the property actually ages.
Is land depreciable?
No. The IRS treats land as having an indefinite useful life, so it is never depreciable. That is why you must split the purchase price into land and building — only the building portion generates a depreciation deduction. Your county assessor’s land/building ratio is a common way to support that split.
What is depreciation recapture when I sell?
When you sell, the depreciation you claimed (or were allowed to claim) is generally "recaptured" and taxed — unrecaptured Section 1250 gain is taxed at a federal rate of up to 25%, separate from regular capital gains. This applies even if you never actually deducted the depreciation, which is why claiming it each year is usually worthwhile. This is an estimate, not tax advice — consult a CPA before selling.
How does this calculator estimate my annual deduction?
It takes your purchase price, subtracts the land portion to get the building basis, then divides by 27.5 or 39 years for a straight-line annual figure. It does not apply the first-year mid-month convention or any cost-segregation acceleration, so your actual Schedule E number may differ. Treat the result as a planning estimate, not tax advice — confirm with a CPA.