Commercial Depreciation Rechner — Formel

## Commercial Property Depreciation

Commercial real estate (office, retail, industrial) uses a 39-year straight-line depreciation schedule for the building structure.

### Building Depreciation

**Annual Depreciation = (Purchase Price - Land Value) / 39**

### Tenant Improvements

Qualified leasehold improvements may be depreciated over 15 years using straight-line, which is faster than the 39-year building schedule.

### Important Distinctions

- **39-year**: Non-residential buildings placed in service after 1993
- **27.5-year**: Residential rental property (80%+ of rental income from dwelling units)
- **15-year**: Land improvements, qualified leasehold improvements
- Land is never depreciable

### Mid-Month Convention

The first and last years of depreciation use a mid-month convention, meaning you get a partial deduction based on the month placed in service.

Lösungsbeispiel

A $1,200,000 commercial building with $300,000 land value and $50,000 in tenant improvements. 35% tax rate.

  1. Depreciable basis: $1,200,000 - $300,000 = $900,000
  2. Annual building depreciation: $900,000 / 39 = $23,077
  3. Annual TI depreciation: $50,000 / 15 = $3,333
  4. Total annual depreciation: $23,077 + $3,333 = $26,410
  5. Annual tax savings: $26,410 x 35% = $9,244
  6. Monthly depreciation: $26,410 / 12 = $2,200.83