Rental Property Depreciation Calculator
How much can you depreciate on a rental property?
Most residential rental properties depreciate over 27.5 years using straight-line depreciation. Some short-term rentals may depreciate over 39 years depending on how you operate. For a $300,000 property with $50,000 land value, that’s $9,091 per year ($250,000 ÷ 27.5).
Residential property investors often rely on their CPAs to track and calculate depreciation across their portfolios, but sometimes you just need a quick and dirty number. Use the calculator below to produce a projected depreciation schedule, including partial first-year amounts based on your placed-in-service date.
What this calculator does:
Generates a complete MACRS depreciation schedule for rental properties, equipment, and improvements. Shows year-by-year deductions including the partial first and last years.
Note that for 5 and 7-year property, the 200 percent declining balance depreciation method is used, while the 27.5 and 39 year useful life variables use straight line depreciation. This is per general IRS guidelines but you should of course consult a qualified CPA before determining which approach is best suited to your specific situation.
MACRS Depreciation Calculator
Yearly Depreciation:
| Year | Depreciation ($) |
|---|
Understanding the MACRS depreciation schedule can get a bit complicated. Just stick with it and try some examples on your own until you get a feel for how it works.
How to Use This Calculator
Step 1: Determine your asset cost
- For rental properties: Purchase price minus land value
- For equipment: Actual purchase price
- For improvements: Cost of renovation/upgrade
Step 2: Find your placed-in-service date
- The date you made the property available for rent (not closing date)
- For mid-renovation purchases, when you completed work and listed it
- This affects your first-year partial depreciation
Step 3: Select the correct useful life
- 27.5 years: Residential rental properties (houses, apartments, condos used as rentals)
- 39 years: Commercial properties (some short-term rentals, office, retail, etc.)
- 5 years: Appliances, computers, office equipment, vehicles
- 7 years: Furniture, fixtures, some landscaping
Step 4: Click Calculate
The calculator generates a year-by-year schedule showing:
- Annual depreciation amount
- Partial amounts for first and last years
Example Calculation Walkthrough
Scenario: You bought a single-family rental property for $350,000 on July 15, 2025.
Step 1: Calculate depreciable basis
- Purchase price: $350,000
- Less land value (from tax assessment): $70,000
- Depreciable basis: $280,000
Step 2: Enter into calculator
- Asset Cost: $280,000
- Date Placed in Service: July 15, 2025
- Useful Life: 27.5 years (residential rental)
Step 3: Review results
- 2025 (partial year): $4,667 (5.5 months)
- 2026-2050: $10,182 per year (full years)
- 2051 (partial year): $5,515 (remaining 6.5 months)
- Total depreciation: $280,000 over 27.5 years
Tax impact: At a 32% marginal tax rate, the partial year 2025 deduction saves you approximately $1,493 in taxes ($4,667 × 32%).
What is Rental Property Depreciation?
Depreciation is a tax deduction that lets you recover the cost of income-producing property over its useful life. The IRS recognizes that buildings and equipment wear out over time, so they allow you to deduct a portion of the cost each year—even though you haven’t actually spent any money.
Why it matters: Depreciation is one of the most valuable tax benefits of owning rental property. It’s a “paper loss” that reduces your taxable income without affecting your actual cash flow.
Key concept: You can only depreciate the building and improvements, not the land. Land doesn’t wear out, so it’s not depreciable. This is why you need to separate land value from building value (use your property tax assessment as a starting point).
What Can You Depreciate?
✅ Depreciable:
- Rental building structure
- Permanently attached improvements (HVAC, roof, flooring)
- Appliances (refrigerator, dishwasher, washer/dryer)
- Furniture (beds, couches, tables for furnished rentals)
- Equipment (lawn mower, snow blower)
- Parking lots, fences, landscaping
❌ Not depreciable:
- Land value
- Repairs and maintenance (deducted immediately)
- Your primary residence (unless you rent part of it)
- Property you’re flipping (held for sale, not rent)
Understanding MACRS Depreciation Methods
MACRS (Modified Accelerated Cost Recovery System) is the current IRS depreciation system. It uses different methods depending on the asset type:
Straight-Line Depreciation (27.5 and 39-year property)
Used for: Rental buildings
How it works: Equal deduction each year. Divide the depreciable basis by the useful life.
Example: $275,000 building ÷ 27.5 years = $10,000/year
Mid-month convention: The IRS assumes you placed the property in service in the middle of the month, regardless of the actual day. This affects your first and last year calculations.
Declining Balance (5 and 7-year property)
Used for: Equipment, furniture, appliances
How it works: Larger deductions in early years, smaller in later years. The calculator uses a 200% declining balance, which doubles the straight-line rate.
Why it’s useful: Maximizes early deductions, which have more present value than deductions years from now.
Example: A $5,000 appliance depreciated over 5 years:
- Year 1: $1,000 (20% × 2 = 40%, but half-year convention = 20%)
- Year 2: $1,600
- Year 3: $960
- Year 4: $576
- Year 5: $576
- Year 6: $288 (partial)
Common Depreciation Scenarios
Scenario 1: You Just Bought a Rental Property
Example: You closed on a $400,000 duplex on September 10, 2025. Land value is $80,000.
What to do:
- Depreciable basis: $320,000 ($400,000 – $80,000 land)
- Placed in service date: When you first made it available to rent (could be after repairs)
- Useful life: 27.5 years (residential rental)
- First-year deduction: Approximately $3,394 (3.5 months with mid-month convention)
Pro tip: If you spent money on improvements before renting it out, those costs can be added to a separate depreciation schedule. Some acquisition costs are also depreciable.
Scenario 2: Major Renovation/Addition
Example: You added a $50,000 room addition to an existing rental in March 2025.
What to do:
- The addition has its own depreciation schedule (separate from the original building)
- Placed in service: March 2025 (when completed and available for rent)
- Depreciable basis: $50,000 (the cost of the addition)
- Useful life: 27.5 years (residential rental property)
- First-year deduction: Approximately $1,667 (9.5 months)
Why separate schedules matter: When you sell, you’ll want to calculate depreciation recapture for each asset individually.
Scenario 3: Appliances & Furniture (Furnished Rental)
Example: Let’s say I furnished my Wailea vacation rental with $15,000 in new appliances and furniture in January 2022.
What to do:
- Separate assets by useful life:
- Appliances (fridge, dishwasher): 5-year property
- Furniture (beds, couches): 7-year property
- Use declining balance depreciation (faster write-off)
- Consider bonus depreciation (may allow 100% first-year deduction depending on tax year)
Example:
- $8,000 appliances (5-year): First-year deduction ~$1,600
- $7,000 furniture (7-year): First-year deduction ~$1,000
- Total first-year: $2,600 (plus building depreciation)
Scenario 4: Converting Personal Residence to Rental
Example: You moved out of your $500,000 home and started renting it in January 2026.
What to do:
- Basis is the LOWER of:
- Original cost (plus improvements): $500,000
- Fair market value when converted: $550,000
- Use $500,000 as basis
- Subtract land value: $500,000 – $100,000 = $400,000 depreciable
- Placed in service: January 2026 (first month rented)
- Annual deduction: $14,545
Important: You generally can’t use the higher FMV. Basis is typically capped at your original cost.
FAQ
Depreciation on residential rental property is calculated using the straight-line method over 27.5 years for most properties. Some short-term rentals are depreciated over 39 years instead. First, subtract the land value from your total purchase price to get the depreciable basis. Then divide by 27.5 (or 39) to get your annual deduction. Adjust the first and last years based on the mid-month convention (when you placed the property in service).
Formula: (Purchase Price – Land Value) ÷ 27.5 (or 39) = Annual Depreciation
Residential rental property has a 27.5-year useful life under MACRS. Commercial rental property (office buildings, retail, warehouses, some short-term rentals) uses 39 years. Personal property like appliances and furniture uses 5 or 7 years depending on the asset type.
No, land is not depreciable. Only the building, improvements, and personal property can be depreciated. Use your property tax assessment to determine the land-to-building ratio, or get a professional appraisal if you need precision.
The placed-in-service date affects your first-year depreciation amount due to the partial-year convention. If you use the wrong date, you’ll claim the wrong partial-year deduction. The IRS assumes you placed the property in service in the middle of the month, so the exact day doesn’t matter—only the month.
Technically no, but you absolutely should. Even if you don’t claim depreciation, the IRS will still calculate depreciation recapture when you sell (you’ll owe taxes on depreciation you “should have taken”). Not claiming it means you may lose the annual tax benefit but still pay the recapture tax later.
Bonus depreciation allows you to deduct 100% of certain property in the first year instead of depreciating it over its useful life. Under the One, Big, Beautiful Bill Act passed in July 2025, bonus depreciation became permanent at 100% for qualified property acquired after January 19, 2025. This reversed the previous phase-out schedule and significantly accelerated tax benefits for rental property owners.
Bonus depreciation applies to personal property like appliances, furniture, and equipment—but not to the building structure itself. For landlords furnishing vacation rentals or upgrading equipment, this generally means you can immediately deduct the full cost of items like refrigerators, washers, dryers, and furniture rather than depreciating them over 5-7 years.
When you sell rental property, you pay depreciation recapture tax on the depreciation you claimed (or should have claimed). Depreciation recapture is taxed as ordinary income up to a maximum of 25%, not at capital gains rates. This is why tracking your depreciation schedule is critical—you’ll need it when you sell.
Example: Claimed $100,000 in depreciation over 10 years. When you sell, that $100,000 is taxed at up to 25%, not the lower 15-20% capital gains rate.
Only if you rent it out for more than 14 days per year AND your personal use is less than the greater of (a) 14 days or (b) 10% of total rental days. If you meet these tests, you can depreciate the rental portion of the property based on the percentage of days rented.
Example: Rented 100 days, used personally 20 days. Rental use is 83% (100÷120), so you depreciate 83% of the building basis.
Repairs are immediately deductible (fixing a broken window, touch-up painting, fixing a leaky faucet). Improvements must be depreciated over time (adding a room, new roof, full kitchen remodel, upgraded HVAC system). The IRS has specific tests, but generally: repairs restore to prior condition, while improvements add value or extend useful life.
Cost segregation accelerates depreciation by reclassifying parts of your property into shorter useful lives (5, 7, or 15 years instead of 27.5). It’s worth considering if:
• Property value is $500,000+
• You’re in a high tax bracket
• You plan to hold the property for several years
• You’ve done significant renovations
Cost seg studies cost $750-$15,000 but can create five and six-figure deductions in year one for many properties.
Related Resources
Want to maximize your rental property tax benefits?
→ Read our complete guide: Vacation Rental Tax Deductions
→ Understand all deductible expenses: What Can Landlords Deduct?
→ Plan your taxes: Rental Property Tax Guide
Other Calculators:
- Airbnb Income Calculator – Project vacation rental returns
- RevPAR Calculator – Track short-term rental performance
- Simple Mortgage Calculator – Calculate loan payments
Ready to work with a tax professional?
Finding a CPA who understands rental property depreciation can save you thousands. Look for someone with real estate investor clients, not just W-2 employees.
Technical Notes
About this calculator: Uses the IRS MACRS depreciation tables with mid-month convention for 27.5 and 39-year property, and half-year convention for 5 and 7-year property. The 200% declining balance method is used for 5 and 7-year assets; straight-line for 27.5 and 39-year.
Known issue: There’s a JavaScript bug that affects January 1 placed-in-service dates. If you enter January 1, the calculator may show a small amount for the prior year. Ignore that amount and add it to your final year instead. We’re working on a fix.
Disclaimer: This calculator is for informational purposes only and should not be considered formal tax advice. Depreciation rules are complex and your specific situation may have unique factors. Always consult a qualified CPA before filing your taxes or making decisions based on depreciation calculations.
