Rental Property Depreciation Calculator
Estimate the annual depreciation deduction on a residential rental property. Enter the purchase price, land value and the month it was placed in service to see the yearly and first-year amounts.
Rental Property Depreciation Calculator
Estimate the annual depreciation deduction on a residential rental property. Enter the purchase price, land value and the month it was placed in service to see the yearly and first-year amounts.
Your Results
Ready to see Shuk in action?
Book a short demo and see how Shuk works for landlords and property managers.
Book a DemoEstimates only, for residential rental property under the general depreciation system. Improvements made later, personal property and passive loss limits follow their own rules. This is not tax advice, so confirm with a tax professional.
How Rental Property Depreciation Works
Depreciation lets a landlord deduct the cost of a rental building over its useful life. For residential rental property the IRS sets that life at 27.5 years, using the straight-line method. Land is never depreciated.
The formula is: annual depreciation = (cost basis - land value) / 27.5. Cost basis is the purchase price plus certain closing costs and improvements made before the property is rented. IRS Publication 527 covers the rules.
Worked Example
A rental bought for $300,000 with $6,000 in eligible closing costs and land worth $60,000 has a depreciable basis of $246,000. Divided by 27.5, that is $8,945 a year, or $745 a month.
At a 24% marginal tax rate, the deduction lowers tax by about $2,147 a year without any cash leaving the property.
The First Year Is Partial
Depreciation starts when the property is placed in service, meaning ready and available to rent. Under the mid-month convention, the first month counts as half a month. A property placed in service in January gets 11.5 months in year one, which here is $8,573.
Finding the Land Value
The split between land and building drives the result. Common sources are the property tax assessment, which lists land and improvements separately, or an appraisal. Apply the assessment's land percentage to your cost.
Depreciation Recapture
Depreciation is not free money. When the property is sold, the depreciation taken is taxed, at a rate of up to 25%. It still helps, because it defers tax for years, but plan for it before you sell.
Related Calculators
- Rental Property Calculator: Analyze the whole investment.
- Return on Investment Calculator: Measure total return on the property.
- Cash Flow Calculator: See the cash side that depreciation does not touch.
- Real Estate Appreciation Calculator: Project the value you may be taxed on at sale.
Frequently Asked Questions
How many years do you depreciate a rental property?
Residential rental property is depreciated over 27.5 years using the straight-line method. Commercial property uses 39 years.
How do I calculate depreciation on a rental property?
Subtract the land value from your cost basis, then divide by 27.5. A $246,000 depreciable basis gives about $8,945 a year.
Can you depreciate land?
No. Only the building and improvements are depreciable, so the cost must be split between land and building.
What is depreciation recapture?
When you sell a rental, the depreciation you took is taxed, at a rate of up to 25%. Depreciation defers tax; it does not remove it.
Shuk helps landlords and property managers get ahead of vacancies, improve renewal visibility, and bring more predictability to every lease cycle.
Book a free 20-min demo to see Shuk today.