A rental property depreciation calculator shows your annual MACRS depreciation deduction and accumulated depreciation — key for tax planning and estimating depreciation recapture when you sell.
Property Details — 2026
How to Calculate Rental Property Depreciation
This rental property depreciation calculator uses the Modified Accelerated Cost Recovery System (MACRS) which the IRS requires for all real property placed in service after 1986.
Establishing the Depreciable Basis
Start with your purchase price plus closing costs you can capitalize (title, recording fees, transfer tax). Subtract the land value — only the building can be depreciated. For a $350,000 property with 20% land allocation, your depreciable basis is $280,000.
Annual Deduction Amount
Residential rental property: divide your depreciable basis by 27.5. On $280,000 basis, annual depreciation = $10,182. Your first and last year are pro-rated based on the mid-month convention. Claim this on Schedule E each year you own the property.
Planning for Depreciation Recapture
Every dollar of depreciation you claim reduces your tax basis. When you sell, recapture tax (25%) applies to all depreciation taken. Plan for this when selling or consider a 1031 exchange to defer both capital gains and recapture taxes.
Frequently Asked Questions
How is rental property depreciation calculated?
Residential rental property uses 27.5-year straight-line depreciation under MACRS. Annual depreciation = (Purchase price - Land value) ÷ 27.5. Commercial property uses 39-year depreciation. The first and last year are pro-rated based on when you placed the property in service.
What is depreciation recapture?
When you sell rental property, the IRS taxes previously claimed depreciation at a maximum rate of 25% (Section 1250 unrecaptured depreciation), not the lower capital gains rate. If you claimed $50,000 in depreciation over the years, up to $50,000 of your sale profit is taxed at 25%.
Can I depreciate land?
No, land cannot be depreciated because it does not wear out. You must allocate purchase price between the building (depreciable) and land (not depreciable). Typical land-to-building ratios range from 10-30% for residential property. Use tax assessor allocation or an appraisal to support your allocation.
What is cost segregation?
Cost segregation is an engineering study that identifies components of a property that can be depreciated faster than the 27.5/39-year standard. Personal property (carpets, appliances, fixtures) may qualify for 5 or 7-year depreciation. Bonus depreciation allows 100% first-year deduction for qualified property (phasing out 2023-2026).
Is this calculator free?
Yes, completely free with no signup required. For educational purposes only. Consult a tax professional for your specific depreciation schedule and recapture calculations.