Rental property depreciation calculator
Enter the purchase price, the land value, any improvements and the month you placed the property in service. See the first-year and yearly depreciation over 27.5 years. Free, no sign-up, not tax advice.
How it is calculated
Residential rental property is depreciated by straight line over 27.5 years, using the mid-month convention: the property is treated as placed in service in the middle of the month, so the first year gets (12 minus the month number plus one half) twelfths of a full year. The depreciable basis is the purchase price minus the value of the land (land is never depreciated) plus the cost of improvements. A full year is the basis divided by 27.5. The last, 28th, tax year takes what is left so the total equals the basis.
The first-year percentages match IRS Publication 946, Table A-6 (residential rental property): 3.485% for January, 3.182% February, 2.879% March, 2.576% April, 2.273% May, 1.970% June, 1.667% July, 1.364% August, 1.061% September, 0.758% October, 0.455% November and 0.152% December. Later years are 3.636% until the final year.
What is not covered
This calculator assumes the price and any improvements all go into service in the month you pick. Improvements made later, personal property such as appliances, bonus or Section 179 deductions, selling the property and depreciation recapture, and the passive activity rules are not included. Each can change the amount, so ask a tax professional.
Where the rules come from
The method is described in IRS Publication 527, Residential Rental Property, and the percentage tables are in IRS Publication 946, How To Depreciate Property (Table A-6).
Questions
How many years do you depreciate a rental property?
Residential rental property is depreciated over 27.5 years by straight line. Because of the mid-month convention, the deductions run across 28 tax years.
Can you depreciate the land?
No. Land is never depreciated, so the land value is taken out of the purchase price before the calculation. Use your property tax bill or an appraisal to split the price between land and building.
What is the mid-month convention?
The property is treated as placed in service in the middle of the month. A property placed in service in January gets 11.5 months of depreciation in the first year, and one placed in service in December gets half a month.
Sources: IRS Publication 527 and IRS Publication 946, Table A-6. This is general information, not tax advice.