Rental Property Depreciation Calculator (27.5 Years, Free)
Residential rental property is depreciated over 27.5 years: each full year you deduct the building’s cost basis divided by 27.5. Land is never depreciated. In the first year you get a partial deduction based on the month the rental was placed in service, using the mid month rule. Enter your numbers below to see your first year, yearly and final year deduction for Schedule E, line 18.
Rental Depreciation Calculator (27.5 years)
How does rental property depreciation work?
- Find the cost basis of the building: purchase price minus land value, plus certain closing costs and any improvements before you rented it.
- Divide by 27.5 to get the full year deduction.
- In the first year, count from the middle of the month you placed it in service to the end of the year.
- Repeat the full amount every year until the basis is used up, about 28 years later.
Example: a $300,000 rental placed in service in April
| Item | Amount |
|---|---|
| Purchase price | $300,000.00 |
| Minus land value | ($60,000.00) |
| Plus building share of closing costs | $4,800.00 |
| Depreciable basis | $244,800.00 |
| Full year deduction ($244,800 / 27.5) | $8,901.82 |
| First year, placed in service in April (8.5 of 12 months) | $6,305.45 |
| Years 2027 to 2052 | $8,901.82 each |
| Final year, 2053 | $7,047.27 |
The first year uses 8.5 months because the mid month rule treats the rental as placed in service on April 15: half of April plus May through December. The IRS table for April shows 2.576%, which gives $6,306.05. The small difference is because the table percentages are rounded.
First year percentage by month
These are the first year rates for residential rental property under the mid month rule (27.5 years, straight line). Every full year after that is 3.636%.
| Month placed in service | First year percentage |
|---|---|
| January | 3.485% |
| February | 3.182% |
| March | 2.879% |
| April | 2.576% |
| May | 2.273% |
| June | 1.970% |
| July | 1.667% |
| August | 1.364% |
| September | 1.061% |
| October | 0.758% |
| November | 0.455% |
| December | 0.152% |
What can you depreciate?
- Yes: the building, plus improvements like a new roof, HVAC or windows (27.5 years).
- Yes, faster: appliances, carpet and furniture used in the rental (5 years), fences and driveways (15 years).
- No: the land, repairs you deduct right away, and your own home or the unit you live in.
Not sure if a project is a repair or an improvement? Read repairs vs improvements.
How do you find the land value?
Many landlords use the land and building split on their county property tax assessment. If the assessment says land is 20% of the total value, use 20% of your purchase price. An appraisal also works. Write down where your number came from and keep it with your records.
When does depreciation start?
Depreciation starts when the property is placed in service, meaning ready and available for rent, even if no tenant has moved in yet. It is not the closing date if you spent time fixing it up first. Report the first year on Form 4562, then carry the amount to Schedule E, line 18. See our Schedule E guide.
Why you should not skip depreciation
When you sell, the IRS reduces your basis by the depreciation you were allowed to take, whether or not you took it, and part of the gain can be taxed as depreciation recapture. Skipping it does not avoid that tax. It only gives up the yearly deduction.
This calculator gives an estimate. It assumes straight line depreciation over 27.5 years with the mid month convention. Your tax preparer or software may round differently. Ask a tax professional before you file.
Buying a rental? Check its income against the price with our free cap rate calculator.
Depreciation pushed your rental into a loss? See when you can deduct rental property losses.
Frequently asked questions
How many years do you depreciate a rental property?
Residential rental buildings are depreciated over 27.5 years using the straight line method and the mid month convention.
Can I depreciate the land?
No. Land is never depreciated. Subtract the land value from the purchase price first.
What is the mid month convention?
It treats a rental as placed in service in the middle of the month, so the first year gets half of that month plus the remaining full months.
Do closing costs get depreciated?
Some closing costs, such as title fees and recording fees, are added to your basis and split between land and building. Only the building part is depreciated. Loan costs are handled differently.
Where does depreciation go on my taxes?
Calculate it on Form 4562 in the first year, then report the yearly amount on Schedule E (Form 1040), line 18.
