Free Rental Depreciation Calculator
Calculate annual straight-line depreciation for a residential rental property over the 27.5-year recovery period.
USD
USD
USD
USD
%
Annual Depreciation Deduction
$10,364
Monthly Depreciation$863.64
Annual Tax Savings$3,316
Depreciable Basis$285,000
Total Depreciation (27.5 years)$285,000
Land as % of Purchase20.0%
Annual Depreciation Deduction vs Marginal Tax Rate
Rental Property Depreciation
The IRS allows residential rental property owners to deduct the cost of the building over 27.5 years using straight-line depreciation.
Formula
Annual Depreciation = Depreciable Basis / 27.5
Depreciable Basis = Purchase Price - Land Value + Capitalized Costs + Improvements
Key Rules
Land Value Allocation
The IRS requires a reasonable allocation between land and building. Methods include:
Example Calculation
Purchased a rental for $350,000 with $70,000 land value, $5,000 capitalized closing costs, no improvements. 32% tax bracket.
- 01Depreciable basis: $350,000 - $70,000 + $5,000 = $285,000
- 02Annual depreciation: $285,000 / 27.5 = $10,364
- 03Monthly depreciation: $10,364 / 12 = $863.64
- 04Annual tax savings: $10,364 x 32% = $3,316
- 05Land as % of purchase: $70,000 / $350,000 = 20.0%
- 06Total depreciation over 27.5 years: $285,000