Rental Property Depreciation Calculator
Calculate your annual IRS depreciation deduction, tax savings, and full 27.5-year MACRS schedule for residential rental property.
Property Type
Property Details
Land is not depreciable. Typically 15–25% of price. = $70,000
Capital improvements, not repairs or closing costs
Placed In Service
IRS mid-month convention applies to year 1
Tax Estimate
Used to estimate annual tax savings only
Annual Depreciation
$10,181.82
$848.48/month
Tax Savings / Year
$2,850.91
at 28% tax rate
First-Year Deduction
$9,757.58
Placed in service: January
First-Year Tax Savings
$2,732.12
27.5-year recovery period
Depreciable Basis Breakdown
Depreciation Schedule (27.5 Years)
Total: $280,000| Year | Deduction | Cumulative | Remaining Basis |
|---|---|---|---|
| Year 1 | $9,757.58 | $9,758 | $270,242 |
| Year 2 | $10,181.82 | $19,939 | $260,061 |
| Year 3 | $10,181.82 | $30,121 | $249,879 |
| Year 4 | $10,181.82 | $40,303 | $239,697 |
| Year 5 | $10,181.82 | $50,485 | $229,515 |
| Year 6 | $10,181.82 | $60,667 | $219,333 |
| Year 7 | $10,181.82 | $70,848 | $209,152 |
| Year 8 | $10,181.82 | $81,030 | $198,970 |
| Year 9 | $10,181.82 | $91,212 | $188,788 |
| Year 10 | $10,181.82 | $101,394 | $178,606 |
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Depreciation FAQs
How is rental property depreciation calculated?
Residential rental property is depreciated using the straight-line MACRS method over 27.5 years. Divide the depreciable basis (purchase price minus land value, plus improvements) by 27.5 to get your annual deduction. The first year uses the IRS mid-month convention — the deduction is prorated based on the month the property was placed in service.
Is land depreciable?
No — land never wears out, so the IRS does not allow it to be depreciated. Only the structure and qualifying improvements are depreciable. You must subtract land value from the purchase price before calculating depreciation.
What is the depreciation life of a residential rental property?
The IRS requires residential rental property to be depreciated over 27.5 years using straight-line MACRS. Commercial rental property has a 39-year recovery period. Land improvements (fences, paving) use a 15-year life, and personal property items (appliances, carpet) use 5 or 7 years.
What is depreciation recapture when I sell?
When you sell a rental property, the IRS 'recaptures' the depreciation you claimed by taxing it at up to 25% (Section 1250 recapture rate), which is typically higher than the long-term capital gains rate. A 1031 exchange can defer both capital gains tax and depreciation recapture.
What is cost segregation and how does it increase depreciation?
Cost segregation is an IRS-approved tax strategy where a qualified engineer reclassifies building components into shorter depreciation lives (5, 7, or 15 years instead of 27.5). This front-loads depreciation deductions into earlier years, accelerating your tax savings. It is most beneficial for properties valued at $500,000 or more.