Rental Property Depreciation Calculator (US)

Allocate the purchase price between land (non-depreciable) and building, then depreciate the building basis straight-line over 27.5 years for residential rental (39 years for commercial). Annual depreciation ≈ building basis ÷ 27.5. A mid-month convention applies in the year you place it in service and the year you dispose of it, making those years partial.

Because land doesn't wear out, get used up, or become obsolete — it has an unlimited useful life — so tax law excludes it from depreciation. Only the building and improvements (which do deteriorate) are depreciable. You must reasonably allocate your purchase price between the two, commonly using the land-to-building ratio from the local property-tax assessment.

When you sell a rental property for more than its depreciated basis, the IRS 'recaptures' the depreciation you claimed (or could have claimed) — taxing that portion as 'unrecaptured Section 1250 gain' at up to 25%, with the rest as capital gain. So depreciation defers tax during ownership but is partly clawed back at sale. Strategies like a 1031 like-kind exchange can defer the recapture; plan for it with a tax professional.

This tool uses straight-line over the life you enter to approximate the schedule. Actual residential rental depreciation is 27.5 years with a mid-month convention (the first year is pro-rated by the month placed in service, so it's a partial year, and a matching partial year falls at the end). For the exact filed figures, use IRS MACRS residential rental tables or your tax software — the annual amount here is a close planning estimate.