Depreciation Calculator
Calculate your annual depreciation deduction for rental property.
Depreciation Schedule
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Request a ToolHow to Use the Depreciation Calculator
This calculator helps rental property owners estimate their annual depreciation deduction using the straight-line method. Follow these steps:
- Enter the property value. This is the total purchase price or fair market value of the property at the time you placed it in service as a rental.
- Enter the land value. Land cannot be depreciated, so you must subtract it from the total property value. Your property tax assessment often shows a breakdown of land versus improvement value. If not, 15-25% of the purchase price is a common estimate for land value.
- Select the useful life. Residential rental property uses 27.5 years. Commercial property uses 39 years. The IRS sets these timeframes.
The calculator instantly shows your annual depreciation deduction, monthly equivalent, and a full year-by-year schedule showing accumulated depreciation and remaining basis. Use the Share button to send a pre-filled link, or Copy to grab the result.
About Real Estate Depreciation
Depreciation is a tax deduction that allows rental property owners to recover the cost of their building over its useful life. Even though the property may be appreciating in market value, the IRS allows you to deduct a portion of the building cost each year as a non-cash expense. This reduces your taxable rental income without requiring you to spend any additional money.
The straight-line method divides the depreciable basis (property value minus land) equally across the useful life. For residential rental property, that means dividing by 27.5 years. For commercial property, 39 years. This is the standard method most rental property owners use.
All calculations run entirely in your browser. We never see or store your financial data.
Frequently Asked Questions
What is rental property depreciation?
Rental property depreciation is a tax deduction that lets you recover the cost of a rental building over time. The IRS considers buildings to wear out over a set number of years (27.5 for residential, 39 for commercial), and you can deduct a portion of the building cost each year. This lowers your taxable rental income even though no cash leaves your pocket. Only the building portion is depreciable. Land is never depreciated.
Why is residential depreciation 27.5 years and commercial 39 years?
The IRS assigns different recovery periods based on property type. Residential rental property (apartments, single-family rentals, duplexes) uses a 27.5-year recovery period. Commercial or nonresidential property (office buildings, retail, warehouses) uses 39 years. These timeframes were set by the Tax Reform Act of 1986 and remain the standard today. A shorter recovery period means a larger annual deduction.
How do I determine the land value?
The most common method is using your county property tax assessment, which typically shows separate values for land and improvements. You can also get a professional appraisal that allocates value between land and building. If neither is available, many investors estimate land at 15-25% of the total purchase price, though this varies by location. In urban areas, land may represent a much higher percentage of total value.
What is depreciation recapture?
When you sell a depreciated rental property, the IRS requires you to "recapture" the depreciation you claimed (or could have claimed) and pay tax on it. Depreciation recapture is taxed at a maximum rate of 25%, which is separate from capital gains tax. For example, if you claimed $100,000 in total depreciation over your ownership period, you would owe up to $25,000 in recapture tax at sale. A 1031 exchange can defer this tax by rolling the gain into a replacement property.