Depreciation Calculator: Calculate real estate depreciation for tax purposes. Depreciation is a tax deduction that allows property owners to deduct the cost of investment property over time, even as the property appreciates in value.
Calculate annual depreciation deductions for investment properties using IRS straight-line depreciation rules. Essential for tax planning and investment analysis.
Land is not depreciable. Check county records or use 20% as estimate.
Renovations, additions, etc. added to cost basis.
Input your purchase price, land value, and any capital improvements to establish your cost basis.
Choose residential (27.5 years) or commercial (39 years) to apply the correct IRS recovery period.
Instantly see your annual and monthly depreciation deduction plus estimated tax savings.
Real estate depreciation is one of the most powerful tax benefits available to property investors. By allowing you to deduct a portion of your property's cost each year, depreciation can significantly reduce your taxable rental income and even create paper losses that offset other income.
The IRS uses the Modified Accelerated Cost Recovery System (MACRS) for real estate depreciation. Residential rental properties are depreciated over 27.5 years using the straight-line method, meaning you deduct an equal amount each year. Commercial properties follow a 39-year schedule. To calculate your depreciable basis, subtract the land value from your purchase price and add any capital improvements.
While this calculator uses standard straight-line depreciation, investors should be aware of advanced strategies like cost segregation studies, bonus depreciation, and Section 179 deductions that can accelerate tax benefits. These strategies can be particularly valuable for larger properties or investors with substantial income to offset. Always consult with a qualified tax professional to optimize your depreciation strategy and ensure compliance with current tax laws.
Financial calculators for every real estate scenario
Estimate buyer and seller closing costs by state
Calculate monthly payments, interest, and amortization
Compare the costs of buying vs renting over time
Find how much house you can afford using the 28/36 rule
Compare refinance options and calculate break-even point
Year-by-year payments on a temporary buydown, what it costs to fund, and how it compares with a permanent buydown
Two quotes side by side: the monthly saving from a lower rate and the month the points pay for themselves
Price cut vs seller credit vs rate buydown: cash to close, monthly payment and seller net for each
Calculate private mortgage insurance costs and removal date
Calculate real estate agent commissions, splits, and net proceeds
Calculate net proceeds from selling with state transfer taxes
Calculate return on investment for rental properties
Key facts
Annual depreciation = (purchase price − land value + capital improvements) ÷ 27.5 years for residential rental property, or ÷ 39 years for nonresidential. Land is never depreciated. The first and last years use the mid-month convention.
About $10,909 a year of depreciation, reducing taxable rental income. On sale, depreciation taken is recaptured at up to 25%.
Use the county assessor’s split between land and improvements, applying its ratio to your purchase price, or an appraisal that states the land value. Land cannot be depreciated, so a higher land share means less annual depreciation. Keep the source with your tax records; the IRS expects a reasonable, documented method.
When a rental is sold, the depreciation taken (or allowable) over the years is taxed as unrecaptured section 1250 gain at a maximum federal rate of 25%, separate from the capital gain on the rest of the profit. A 1031 exchange defers both; dying with the property steps up the basis and erases it.
Last reviewed September 8, 2026 by the EstatePass editorial team. Formulas and program limits are checked against the published rules; figures on this page are arithmetic, not market statistics.
Agent Workspace
The workspace turns the figures you trust into a market update film, a seller net sheet in the CMA, or a buyer education video, from the same numbers. Free to start; one Pro covers every tool and every EstatePass exam channel.
Explore specific scenarios and get tailored tips, best practices, and examples.