Calculators › Depreciation Calculator
TaxesBy Cedrick Reese, Property Rental Calculator
Free calculator for your annual rental property depreciation deduction, including the prorated first-year amount and its cash value at your tax rate.
Your property
Land is not depreciable. Your county assessment ratio is the usual support; 15 to 25% is typical.
The IRS treats it as placed in service mid-month, so the first year is prorated.
To show the deduction's cash value.
Enter a purchase price above the land value to see the deduction.
| Year | Depreciation | Cumulative | Remaining |
|---|
Straight-line MACRS estimate. Whether the deduction offsets your other income depends on the passive-loss rules, and everything you deduct is recaptured at sale. Educational only, not tax advice. See IRS Publications 527 and 946, and confirm with a CPA. Last reviewed August 2026.
You take the building's cost, which is your purchase price plus buying costs and improvements, minus the land value, and spread it over 27.5 years for residential rental property or 39 years for commercial. That is straight-line MACRS: the same deduction every full year, about 3.64% of basis for residential. The one wrinkle is the first year. The IRS uses a mid-month convention, so a property placed in service in June gets 6.5 months of depreciation that year, not twelve.
Buy a residential rental for $300,000 with $60,000 of that allocated to land. The depreciable basis is $240,000, and dividing by 27.5 gives about $8,727 a year. Place it in service in June and the first-year deduction is prorated to roughly $4,727. At a 24% marginal rate, a full year's deduction shelters about $2,095 of tax, without spending a dollar.
Depreciation always offsets the property's own income. Whether it offsets your W-2 or other active income depends on the passive-loss rules, which generally require real estate professional status or a materially participated short-term rental. And the catch: every dollar you depreciate lowers your basis and comes back as recapture when you sell, taxed at up to 25%. The depreciation recapture estimator handles that side, and cost segregation is how investors accelerate the early years.
No. Only the building and improvements depreciate. You must separate land from the total, usually using your county's assessment ratio.
The IRS assumes you placed the property in service in the middle of whatever month you did, so the first year is prorated. A March start gets 9.5 of 12 months; November gets 1.5.
Only if you meet the passive-loss rules, real estate professional status or a materially participated short-term rental. Otherwise it shelters the property's income and carries forward.
It is recaptured. The IRS taxes the depreciation you took, or were allowed to take, at up to 25% at sale, unless you defer with a 1031 exchange.
This calculator was built by Cedrick Reese, a web developer, using straight-line MACRS depreciation exactly as the IRS applies it to rental property: basis minus land, spread over 27.5 years for residential or 39 for commercial, with a mid-month convention prorating the first year. Those recovery periods and the mid-month rule come from current IRS depreciation rules, and the calculator gets rechecked whenever those rules change. It's meant to match the numbers you'd get running the same figures through Form 4562, not a simplified stand-in.