The Property Depreciation Calculator works out your annual depreciation deduction under IRS MACRS rules for residential rental property. Enter your purchase price, land value, and the year you placed the property in service to see your depreciable basis, annual allowance, and total depreciation claimed to date.
How to use this tool
Enter the total price you paid for the property, including closing costs. Then enter the land value — land cannot be depreciated under IRS rules. Finally, enter the year you first placed the property in service as a rental.
The tool calculates your depreciable basis (purchase price minus land value), divides it by 27.5 years to find your annual deduction, and multiplies by years in service to show total depreciation claimed to date.
If you are unsure of the land value, check your county property tax assessment. Assessors typically split the assessed value between land and improvements, and that ratio is a widely accepted starting point for a depreciation allocation.
Understanding your results
Depreciable basis is the portion of your purchase price allocated to the building and improvements. Land is excluded because it does not wear out.
Annual depreciation is your depreciable basis divided by 27.5. You can deduct this amount from your rental income on Schedule E each tax year the property is in service.
Years depreciated is the number of full years from when you placed the property in service to 2026. This tool uses whole years for simplicity; your actual first-year deduction may be prorated under the mid-month convention.
Total depreciation claimed to date is the cumulative deduction you have taken. This figure matters when you sell: the IRS recaptures depreciation at up to 25% under Section 1250.
Legal context
Under the Modified Accelerated Cost Recovery System (MACRS), the IRS requires residential rental property to be depreciated over 27.5 years using the straight-line method (IRS Publication 946). Land is never depreciable. The mid-month convention applies in the year of purchase and the year of sale, so your actual first-year deduction is based on the month you placed the property in service, not the full year.
Depreciation reduces your taxable rental income each year. When you sell the property, the IRS taxes accumulated depreciation as ordinary income up to 25% under the unrecaptured Section 1250 gain rules. This applies even if you never actively claimed the deduction — the IRS calculates recapture based on depreciation allowed or allowable.
This tool is a planning estimate. Consult a licensed CPA or tax advisor before filing. Individual circumstances — including bonus depreciation elections, cost segregation studies, and partial-year conventions — can alter the figures materially.
Frequently asked questions
What is the 27.5-year depreciation rule?
The IRS assigns residential rental property a 27.5-year recovery period under MACRS. This means you divide your depreciable basis by 27.5 to find your annual straight-line deduction. The rule applies to the building structure and permanent fixtures — not to land, and not to personal property inside the unit, which depreciates on a shorter schedule.
Can I depreciate land?
No. Land has an indefinite useful life under IRS rules and cannot be depreciated. You must allocate the purchase price between land and building before calculating depreciation. County tax assessments, qualified appraisals, and the relative fair market values at purchase are all accepted methods. Using a reasonable allocation protects you if the IRS audits your Schedule E.
What happens to depreciation when I sell in California?
At federal level, accumulated depreciation is recaptured and taxed at up to 25% under Section 1250 rules. California conforms to federal depreciation rules for computing gain, but California does not offer a preferential capital gains rate — all gain, including depreciation recapture, is taxed as ordinary income at your California marginal rate. This makes depreciation recapture particularly costly for California landlords in high income brackets.
What happens to depreciation when I sell in Texas?
Texas has no state income tax, so depreciation recapture applies only at the federal level. Accumulated depreciation is taxed as ordinary income up to 25% federally under unrecaptured Section 1250 gain rules. The absence of state tax makes Texas one of the more favorable states for landlords selling appreciated rental property.
What happens to depreciation when I sell in Florida?
Florida has no state income tax. Depreciation recapture is a federal-only cost for Florida landlords, taxed at up to 25% on accumulated depreciation. As with Texas, the absence of state-level recapture tax improves the net proceeds from a sale compared to states that tax gains at the full income rate.
What happens to depreciation when I sell in New York?
New York State taxes capital gains as ordinary income, so depreciation recapture is taxed at your New York marginal rate — up to 10.9% state tax — on top of federal recapture tax of up to 25%. New York City residents face an additional city tax. For landlords in New York City, the combined federal, state, and city burden on depreciation recapture can exceed 40% of the recaptured amount.
What is depreciation recapture tax?
Depreciation recapture is the tax you owe on accumulated depreciation when you sell a rental property. The IRS taxes this portion of your gain as ordinary income at up to 25% — separate from long-term capital gains rates. Recapture applies to the total depreciation allowed or allowable during your ownership period, even if you did not claim it on your tax returns.
Can I take bonus depreciation on rental property?
Bonus depreciation under Section 168(k) does not apply to the residential rental building itself, which must use the 27.5-year straight-line method. However, bonus depreciation can apply to personal property and qualified improvement property inside or attached to the building if identified through a cost segregation study. A cost segregation study reclassifies components to shorter recovery periods, accelerating deductions in early years.
What if I bought the property before it became a rental?
If you lived in the property before converting it to a rental, the depreciable basis is the lower of your adjusted basis (purchase price plus improvements minus prior deductions) or the fair market value at the date of conversion. You start depreciating from the conversion date, not the original purchase date. A qualified appraisal at the time of conversion is advisable to document the fair market value used.
How do I find the land value to exclude from depreciation?
The most common approach is to use your county assessor’s land-to-improvement ratio from the property tax assessment. If the assessment shows 25% land and 75% improvements, apply that same ratio to your purchase price. Alternatively, you can get a qualified appraisal that separately values the land. The IRS does not mandate a specific method, but whatever approach you use should be documented and reasonable.
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