Rental Property Depreciation Calculator
Calculate your 27.5-year MACRS rental property depreciation deduction after the land carve-out, with mid-month first-year timing and tax savings.
Rental Property Depreciation Calculator
Purchase Price
Property Type
Residential rental property uses a 27.5-year GDS recovery period; nonresidential real property placed in service after May 12, 1993 uses 39 years. Both are straight-line with the mid-month convention.
Land Value
The percentage is applied to your total cost basis (price plus capitalized costs), which matches the county assessor ratio method.
Land is never depreciable (IRS Pub. 527). The usual shortcut is the land-to-improvement ratio on your property tax assessment.
Capitalized Costs
Include title insurance, transfer taxes, legal fees, surveys, and recording fees. Leave out points, appraisal fees, credit report fees, and fire insurance premiums: those are expensed or amortized, not added to basis.
Placed In Service
Under the mid-month convention only the month matters, never the day. Property is placed in service when it is ready and available for rent, which is not always the closing date.
Marginal Tax Rate
2026 federal rates. Depreciation offsets ordinary rental income, so your savings depend on the bracket that income sits in.
Where you stand in 2026
If you sell: Section 1250 recapture
Unrecaptured Section 1250 gain is taxed at your ordinary rate, capped at 25% (IRC 1(h)(1)(E)). Recapture applies to depreciation you deducted or could have deducted, so skipping the deduction does not avoid the bill.
Estimates for the 2026 tax year. Passive activity loss limits under Section 469 can defer the deduction, and the 3.8% net investment income tax is not included. Not tax or legal advice.
Depreciation Schedule
| Yr | Tax year | Deduction | Accumulated | Remaining |
|---|
The published IRS tables round to between 99.99% and 100.00% of basis. The final year here is computed as the residual so the schedule totals your basis exactly.
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How rental property depreciation works under 27.5-year MACRS
Depreciation is the deduction that lets you recover the cost of a building over the years you rent it out. The IRS does not treat it as optional. Under the Modified Accelerated Cost Recovery System (MACRS), residential rental property uses the General Depreciation System: straight-line, over 27.5 years, with a mid-month convention. Nonresidential real property placed in service after May 12, 1993 runs the same way over 39 years.
The arithmetic is short. Take a $400,000 house with $100,000 of land value and no capitalized closing costs. Your depreciable basis is $300,000. Divide by 27.5 and the full-year deduction is $10,909. At a 24% marginal rate, that is roughly $2,618 of tax saved every year the property is in service.
The deduction lands on Schedule E, where it reduces rental income dollar for dollar. It lowers your taxable income, not your tax, so what the deduction is worth depends on your bracket. Not sure of your bracket? The Tax Bracket Calculator sorts that out.
Splitting the purchase price between land and building
Land is never depreciable. Publication 527 says so directly: land generally does not wear out, become obsolete, or get used up, so it has no determinable useful life. Only the structure and its improvements do. Depreciating the full purchase price is a common mistake, and it overstates every year of the schedule.
Two allocation methods hold up. The assessor ratio method takes the land and improvement values from your property tax assessment, works out the land share, and applies that percentage to your total cost basis. The appraisal method uses a professional allocation between land and improvements. Either way, save the document you relied on.
Some closing costs get capitalized into basis and depreciated with the building: title insurance, transfer taxes, legal fees, surveys, and recording fees. Others do not. Loan points, appraisal fees, credit report fees, and prepaid fire insurance are expensed or amortized separately. Capital improvements (a new roof, an addition) go into basis; ordinary repairs are deducted in the year you pay them.
The mid-month convention, your first year, and your last
The mid-month convention treats property as placed in service at the midpoint of the month it entered service, no matter which day that was. A January placement gets 11.5 months in year one, which Table A-6 states as 3.485% of basis. A December placement gets half a month, or 0.152%. On the 39-year table (Table A-7a), those same bookends are 2.461% and 0.107%. Closing on the 2nd or the 29th changes nothing.
"Placed in service" means ready and available for rent, not the day you took title. A house that closed in March but sat under renovation until June is placed in service in June, and that is the month that drives the first-year percentage.
Because year one is partial, the schedule runs past the nominal recovery period. A residential rental placed in service January through June finishes in its 28th tax year; July through December pushes the stub into a 29th. A 39-year commercial building always spans 40 tax years. That is why this calculator lists every year rather than quoting a tidy 27.5.
Depreciation recapture and what OBBB did (and didn't) change
When you sell, the depreciation you took comes back as unrecaptured Section 1250 gain. It is taxed at your ordinary income rate, capped at 25%. A landlord in the 22% bracket pays 22%, not the flat 25% many calculators assume. Because post-1986 real property is straight-line only, there is no additional depreciation to recapture at full ordinary rates. The amount recaptured is limited to your actual gain, and the 3.8% net investment income tax can stack on top. For the rest of the sale math, see the Capital Gains Tax Calculator.
The trap worth remembering: Publication 527 reduces your basis by depreciation you deducted or could have deducted. Never claiming the deduction does not spare you the recapture, it just means you paid for it twice. Missed years are usually fixed with a Form 3115 change in accounting method rather than amended returns.
On the One Big Beautiful Bill Act (P.L. 119-21): 100% bonus depreciation is back permanently, but it only reaches property with a MACRS recovery period of 20 years or less. A 27.5-year residential structure and a 39-year commercial structure both sit outside that limit, so neither building qualifies. Bonus depreciation does apply to shorter-lived components a cost segregation study carves out, such as appliances, carpeting, cabinetry, and land improvements in the 5-, 7-, and 15-year classes. The Section 179 Deduction Calculator covers that side of the ledger.
The other new write-off, the Section 168(n) deduction for qualified production property, is nonresidential and limited to facilities used in domestic manufacturing, refining, or other production, so it does not reach rental real estate. Everything else here is unchanged for 2026: the same recovery periods, the same straight-line method, the same mid-month convention.
This calculator provides estimates for informational purposes only and is not tax or legal advice. It models straight-line MACRS depreciation under the mid-month convention for a property used 100% as a rental. It does not account for passive activity loss limits under Section 469, cost segregation, ADS elections, personal-use allocation, partial-year rental use, like-kind exchanges, or state depreciation rules. Depreciation recapture at sale is limited to your actual gain and does not include the 3.8% net investment income tax. Consult a tax professional about your situation.
Frequently Asked Questions
Common questions about rental property depreciation calculator
How do you calculate depreciation on a rental property?
Start with what you paid, add the closing costs you had to capitalize (title insurance, transfer taxes, legal, survey, recording) plus any capital improvements, then subtract the value of the land. That leaves your depreciable basis. Divide it by 27.5 for residential rental property and that is your full-year deduction. Your first year is prorated under the mid-month convention, so it is always a little smaller.
How many years do you depreciate a rental property?
27.5 years for residential rental property and 39 years for nonresidential (commercial) real property, both straight-line under MACRS GDS. Because of the mid-month convention, the deductions actually stretch across 28 or 29 calendar tax years for a residential property: 28 if you placed it in service January through June, 29 if July through December. A 39-year commercial building always runs 40 tax years.
Why can't I depreciate the land?
IRS Publication 527 puts it plainly: you can't depreciate the cost of land because land generally doesn't wear out, become obsolete, or get used up. Only the building and its improvements have a determinable useful life. Skipping the land carve-out is a common mistake, and it inflates every year of your deduction.
How do I figure out how much of my purchase price is land?
The usual shortcut is the county assessor ratio: take the land and improvement values from your property tax assessment, work out the land percentage, and apply that percentage to your total cost basis. A separate appraisal that allocates between land and improvements also works. Whichever method you use, keep the documentation, because the allocation is exactly the kind of number an examiner asks about.
What is the mid-month convention and how does it affect my first year?
The IRS treats real property as placed in service at the midpoint of whatever month it actually went into service, regardless of the day. A property placed in service in January gets 11.5 months of depreciation in year one, which is 3.485% of basis on the 27.5-year table, while December gets half a month, just 0.152%. The day you closed makes no difference; only the month does.
What happens if I never claimed depreciation on my rental?
You still owe the recapture. Publication 527 requires you to reduce your basis by depreciation you deducted or could have deducted. That allowed-or-allowable rule means skipping depreciation gets you the worst of both outcomes: no deduction while you own the property, and full recapture when you sell. Missed years are generally corrected with a Form 3115 change in accounting method rather than by amending old returns.
Does the One Big Beautiful Bill's 100% bonus depreciation apply to my rental house?
Not to the house itself. P.L. 119-21 permanently restored 100% bonus depreciation, but it only reaches property with a MACRS recovery period of 20 years or less. A residential rental building is 27.5 years and a commercial building is 39, so both are excluded and still depreciate straight-line. Bonus depreciation can apply to shorter-lived components such as appliances, flooring, and land improvements if a cost segregation study breaks them out.
How much tax will I owe on depreciation recapture when I sell?
The depreciation you claimed comes back as unrecaptured Section 1250 gain, taxed at your ordinary rate but capped at 25%. If you are in the 22% bracket, you pay 22%, not 25%. The amount recaptured is limited to your actual gain, and the 3.8% net investment income tax can apply on top for higher earners.