Rental Property Depreciation Calculator
The building you rent out wears out on paper, and the IRS lets you deduct that every year. Enter what you paid, the land value and when the property was ready to rent to see this year's depreciation deduction, the total so far and the full year-by-year schedule.
IRS rules checked October 2026Your depreciation
A planning estimate, not tax advice. It uses the standard method for rental buildings (straight line, mid-month convention) and leaves out bonus depreciation, cost segregation and the year of sale.
How rental property depreciation works
- Only the building is depreciated, not the land. Your basis is what you paid plus the closing costs that belong in it, minus the value of the land. If you don't know the land value, you can split the price in the same ratio as the land and building values on your property tax assessment.
- Some closing costs go into the basis. Title insurance, recording fees, transfer taxes, legal fees and surveys are added to it. Costs of getting the mortgage (such as points) and insurance premiums are not.
- Residential rentals use 27.5 years, straight line. That is 3.636% of the basis for each full year. A building counts as residential rental property when at least 80% of its rent comes from homes or apartments. Commercial buildings use 39 years.
- The first year is a partial year. The IRS mid-month rule treats the property as placed in service in the middle of its month, so a building ready to rent in April counts 8.5 months in its first year.
- It starts when the property is ready to rent, not when you bought it or when the first tenant moved in.
- Improvements get their own schedule. A new roof, an addition or a remodel is depreciated over 27.5 years from the month it's done. Repairs that only keep the property in good shape are deducted in the year you pay for them. Appliances, carpet and furniture have shorter lives (usually 5 years).
- It goes on Schedule E, line 18, with Form 4562 in the first year. Depreciation lowers your taxable rental income without costing you cash, which is why a rental can show a tax loss while it pays you every month.
Worked example
Example. A duplex costs $300,000, with $6,000 of closing costs that go into the basis. The county assessment puts 20% of its value in the land, so $60,000 of the price is land. It is ready to rent in April 2026.
| Step | Amount |
|---|---|
| Purchase price | $300,000 |
| Closing costs added | +$6,000 |
| Land value | -$60,000 |
| Depreciable basis | $246,000 |
| Full year ($246,000 ÷ 27.5) | $8,945.45 |
| 2026 (April: 8.5 months) | $6,336.36 (2.576%) |
| 2027 | $8,945.46 |
| 2028 | $8,945.45 |
| 2053 (last year) | $7,081.82 |
| Total, 2026–2053 | $246,000 |
Each year after the first is $8,945.45, give or take a cent from rounding, until 2053, when the last $7,081.82 is deducted. Over 28 tax years the deductions add up to exactly the $246,000 basis.
First-year depreciation by month (27.5 years)
The IRS publishes the first-year percentage for each month placed in service (Pub 527, Table 2-2d). The calculator works it out exactly, so it matches the table to the rounding shown.
| Placed in service | IRS table | Exact | First year on $100,000 |
|---|---|---|---|
| January | 3.485% | 3.4848% | $3,484.85 |
| February | 3.182% | 3.1818% | $3,181.82 |
| March | 2.879% | 2.8788% | $2,878.79 |
| April | 2.576% | 2.5758% | $2,575.76 |
| May | 2.273% | 2.2727% | $2,272.73 |
| June | 1.970% | 1.9697% | $1,969.70 |
| July | 1.667% | 1.6667% | $1,666.67 |
| August | 1.364% | 1.3636% | $1,363.64 |
| September | 1.061% | 1.0606% | $1,060.61 |
| October | 0.758% | 0.7576% | $757.58 |
| November | 0.455% | 0.4545% | $454.55 |
| December | 0.152% | 0.1515% | $151.52 |
Frequently asked questions
How do I calculate depreciation on a rental property?
Take what you paid plus the closing costs that go into the basis, subtract the land value, and divide by 27.5 for a residential rental. That's the deduction for a full year. In the example, a $246,000 basis gives $8,945.45 a year. The first year is smaller because it only counts from the middle of the month the property was ready to rent.
Why is the first year's depreciation smaller?
Because of the IRS mid-month convention: a rental placed in service in April is treated as starting on the 15th, so it gets 8.5 months of depreciation that year ($6,336.36, or 2.576% of the basis, in the example). The months it misses come at the end, in year 28.
Can I depreciate the land?
No. Land doesn't wear out, so only the building and improvements are depreciated. You get the land's cost back when you sell.
When does depreciation on a rental property start?
When the property is placed in service: ready and available to rent. If you bought it in January, fixed it up and listed it in March, depreciation starts in March, even if the first tenant moves in later.
What if I forgot to claim depreciation in past years?
When you sell, the IRS treats you as if you took the depreciation you were allowed, whether you claimed it or not. You can usually catch up on missed years with Form 3115. Ask a tax professional to help with it.
What happens to depreciation when I sell?
The depreciation lowers your basis, so your gain is larger. That part of the gain, called unrecaptured section 1250 gain, is taxed at up to 25%. In the year you sell, you deduct depreciation up to the middle of the month of the sale.
Is it 27.5 or 39 years?
27.5 years for residential rental property: houses, condos, duplexes and apartment buildings where at least 80% of the rent is from dwelling units. 39 years for commercial buildings such as offices and stores. Short-term rentals where most stays are short may be treated differently: check with a tax professional.
Is this tax advice?
No. It's a planning estimate using the standard method (straight line, mid-month). It doesn't cover bonus depreciation, cost segregation, the year of sale or property you also live in. Confirm the numbers with a tax professional or your tax software.
More calculators
Sources
IRS publications behind these rules, checked October 2026.