Depreciation Calculator (Rental)

Calculate the annual depreciation deduction for a rental property using the IRS straight-line method. Residential rental properties depreciate over 27.5 years; commercial properties over 39 years.

Property Details

Property Type:

Residential (27.5 years)

Commercial (39 years)

Total Purchase Price ($):

Land Value ($):

Land is not depreciable. Typically 20-30% of purchase price.

Capital Improvements ($):

Additions made after purchase that extend the property's useful life.

Date Placed in Service:

Used to calculate the partial first-year deduction.

Results

Depreciable Basis

$0

Annual Deduction

$0

Recovery Period

27.5 yrs

First-Year Deduction

$0

Basis Breakdown

Purchase Price:	$0
Less: Land Value:	$0
Capital Improvements:	$0
Depreciable Basis:	$0

Annual Deduction Summary

Recovery Period:	27.5 years
Annual Rate:	3.636%
Full-Year Deduction:	$0
First-Year Deduction:	$0

Depreciation Schedule

Year	Deduction	Cumulative	Remaining Basis

How It Works

The IRS requires rental property owners to depreciate the cost of the building (not land) over a fixed recovery period using the straight-line method under the Modified Accelerated Cost Recovery System (MACRS).

Recovery Periods:

Residential rental property (e.g. single-family homes, apartments): 27.5 years
Commercial / non-residential property (e.g. offices, retail): 39 years

Formulas:

Depreciable basis = Purchase Price - Land Value + Capital Improvements
Annual deduction = Depreciable Basis / Recovery Period
First-year deduction = Annual Deduction x (months in service / 12) using the mid-month convention

The mid-month convention applies in the first and last year: the property is treated as placed in service at the midpoint of the month it was actually placed in service, giving you half a month's depreciation for that month.

Land is never depreciable. When the purchase price is not separately allocated, use an appraisal or the county tax assessment ratio to estimate the land value.

Key Notes

What Can Be Depreciated

The building structure and permanent fixtures
Capital improvements that extend useful life (e.g. new roof, HVAC)
Appliances and carpeting (often depreciated separately over 5 years)

What Cannot Be Depreciated

Land (never depreciates)
Personal property used in the home
Inventory or property held for sale
Repairs and maintenance (deducted as current expenses)

Related Utils

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