Why is residential rental property depreciated over 27.5 years?

It is the recovery period the IRS sets for residential rental property under the General Depreciation System, using the straight line method and the mid-month convention.

Can I depreciate the land under my apartment building?

No. The IRS says land cannot be depreciated because it does not wear out or get used up, so you split the price between land and building first.

When does depreciation start on a rental?

When the property is placed in service, meaning ready and available to rent, even before the first tenant moves in. The mid-month convention counts that month as half.

Does a new roof get depreciated over 27.5 years too?

Generally yes, as an improvement to residential rental property, on its own schedule starting the month it is placed in service. Your tax preparer confirms the treatment.

Rental Depreciation: 27.5 Years Explained

The IRS lets you deduct the cost of a residential rental building, but not its land, in equal yearly amounts over 27.5 years, using the straight line method and the mid-month convention. A building that cost $1,100,000 without the land gives about $40,000 of depreciation a year, a little less in the first and last years. Improvements you add later start their own 27.5 year schedule.

The rule in four parts

Part	What the IRS says	Where
System	Generally use MACRS for residential rental property placed in service after 1986	Pub 527
Recovery period	27.5 years under the General Depreciation System (30 under the Alternative system)	Pub 527, Pub 946
Method	Straight line	Pub 527, Pub 946
Convention	Mid-month: placed in service or disposed of at the midpoint of the month	Pub 946

Sources: Publication 527, Residential Rental Property and Publication 946, How To Depreciate Property, both the 2025 editions. Publication 946 defines residential rental property as a building where 80% or more of the gross rental income for the year is from dwelling units, which matters if your building has shops on the ground floor.

Step one: find the building's basis

Depreciation starts from basis, which Publication 527 says is usually the cost of what you bought. Two adjustments matter most.

Take out the land. Publication 946 says you cannot depreciate land because it does not wear out, become obsolete or get used up. The purchase price has to be split between land and building, and the split should be supportable. Ask your tax preparer how to set it.
Add certain closing costs. Publication 527 lists settlement fees such as abstract fees, legal fees, recording fees and title insurance as part of basis.

Example a made-up 18 unit building is bought for $1,400,000, and $300,000 of that is the land. To keep the math simple, assume closing costs are already included. The depreciable basis of the building is $1,400,000 minus $300,000, or $1,100,000.

Step two: the first year and the mid-month convention

Depreciation begins when the property is placed in service, which Publication 946 describes as ready and available for a specific use. For a rental that means ready and available to rent, even if no tenant has moved in yet.

The mid-month convention treats the building as placed in service halfway through that month, so the first month counts as half a month. A full year of depreciation is basis divided by 27.5.

Example the made-up $1,100,000 building is ready to rent in February. A full year is $1,100,000 divided by 27.5, which is $40,000. February counts as half a month, plus March to December is 10 months, so the first year is 10.5 months: $40,000 times 10.5 divided by 12 is $35,000. The IRS table in Publication 527 gives 3.182% for property placed in service in February; $1,100,000 times 3.182% is $35,002, the same answer with the table's rounding.

Publication 527 works its own example the same way: a house with a $160,000 building basis placed in service on February 8 gets $5,091 in the first year, using that 3.182% rate.

The years that follow

Each full year after the first is basis divided by 27.5, which the IRS tables show as 3.636%. Because the first year counted 10.5 months, the last year picks up the remaining 7.5 months, so the 330 months of 27.5 years are spread over 28 tax years. Depreciation stops when you have recovered the whole basis or when you retire the property from service, whichever comes first (Publication 946).

Year	Months counted	Depreciation	Basis left
1 (placed in service in February)	10.5	$35,000	$1,065,000
2	12	$40,000	$1,025,000
3	12	$40,000	$985,000
4 to 27	12 each	$40,000 each	$25,000 after year 27
28	7.5	$25,000	$0

This table uses the exact fractions so it adds up to $1,100,000. The IRS percentage tables round, so a return built from them can differ by a few dollars a year.

If you sell partway through, the mid-month convention applies again. Publication 946 shows a building bought for $100,000 (without land) that is sold on March 2: the full-year figure of $3,636 is multiplied by 2.5 over 12, giving $757.50 for the year of sale.

Improvements start their own clock

Publication 527 says you must capitalize the cost of improving a rental property, and that an addition is depreciated as residential rental property over 27.5 years. Each improvement gets its own schedule starting the month it is placed in service.

Example in May of a later year, the made-up building gets a $60,000 roof. A full year is $60,000 divided by 27.5, or about $2,181.82. May counts as half a month plus June to December, 7.5 months, so the first year is $2,181.82 times 7.5 divided by 12, or about $1,363.64. Publication 527's table gives 2.273% for May; $60,000 times 2.273% is $1,363.80.

Smaller purchases may not need to be capitalized at all. See the de minimis safe harbor election. Not everything you buy for a building is part of the building, so your tax preparer decides which class and recovery period each item belongs to.

What your books need to track

Land, building and each improvement in separate asset accounts.
The date each was placed in service, by month.
The invoices and closing statement that prove the cost.
One depreciation entry a year (or a twelfth a month): depreciation expense, and accumulated depreciation on the balance sheet.

Keep these records as long as you own the building and after. The IRS says to keep records relating to property until the period of limitations expires for the year you dispose of it (How long should I keep records). Depreciation also affects the tax on a sale, so your tax preparer will want the full history then.

How DoorKeeping handles it

DoorKeeping keeps each property's books separately, and the expense accounts map to Schedule E lines, including depreciation on line 18. You can keep the building, land and improvements apart in that property's ledger and ask your AI app for the property's P&L at any time. DoorKeeping does not figure your tax depreciation or give tax advice; your tax preparer does that on Form 4562.

Sources

IRS, Publication 527, Residential Rental Property (2025), read Oct 29, 2026
IRS, Publication 946, How To Depreciate Property (2025), read Oct 29, 2026
IRS, How long should I keep records, read Oct 29, 2026

Questions

Why is residential rental property depreciated over 27.5 years?: It is the recovery period the IRS sets for residential rental property under the General Depreciation System, using the straight line method and the mid-month convention.
Can I depreciate the land under my apartment building?: No. The IRS says land cannot be depreciated because it does not wear out or get used up, so you split the price between land and building first.
When does depreciation start on a rental?: When the property is placed in service, meaning ready and available to rent, even before the first tenant moves in. The mid-month convention counts that month as half.
Does a new roof get depreciated over 27.5 years too?: Generally yes, as an improvement to residential rental property, on its own schedule starting the month it is placed in service. Your tax preparer confirms the treatment.