Rental Property Depreciation Calculator
Your building's basis, the 27.5-year deduction, the first-year mid-month math, and what it all saves you at your bracket — plus the cost-seg question worth asking.
A guide by Taxstra Tax & Accounting — CPA-led tax strategy for business owners
Quick Answer
A residential rental depreciates over 27.5 years, straight-line — roughly 3.64% per year of your building's basis (purchase price minus land, plus improvements). It's the rare deduction that requires no cash outlay, and the IRS effectively makes you take it, because depreciation is recaptured at sale whether you claimed it or not. This calculator gives you the basis, the annual number, and the first-year mid-month figure.
Your Property
Include closing costs added to basis.
Land isn't depreciable. 15–25% is typical; your county assessment is the usual support.
Renovations before renting (roof, kitchen, additions).
When it was ready and available to rent — not when it was purchased.
To show what each year's deduction is worth in cash.
Enter your purchase price above to see the depreciation math.
How Rental Depreciation Actually Works
Depreciation is the deduction you get for owning a building that is, in the IRS's eyes, slowly wearing out — even while it appreciates in the real world. You deduct the building's cost over 27.5 years (39 for commercial), no receipts required. The two places investors leave money on the table: sloppy land allocation (an unexamined 50% land assumption can halve the deduction; a documented 15–20% often stands) and skipped years — depreciation is "allowed or allowable," so unclaimed years still get recaptured at sale. The fix for missed years is a Form 3115 catch-up, claimed all at once in the current year.
Whether the deduction saves you money this year is a separate question: rental losses are passive by default and may be limited against W-2 income. The exceptions — the short-term rental strategy and real estate professional status — are exactly where large depreciation numbers become large refunds. And when you're ready to accelerate the schedule itself, that's the cost segregation conversation.
Depreciation isn't optional record-keeping — it's exit planning
Every dollar of depreciation lowers your basis and returns as recapture at sale (unless deferred via 1031 or erased by step-up at death). The investors who win treat depreciation, entity structure, and exit as one model — not three surprises.
Common Questions
Own rentals? Get the full depreciation strategy
Land allocation, cost segregation, passive-loss planning, and the exit model — we run the whole picture for real estate investors nationwide. One free call to see what you're missing.
Find Out What You're Overpaying in Taxes
Book a free 30-minute call to walk through your situation. We'll tell you exactly how our CPA-led team can help — and whether we're the right fit.