Rental Property Depreciation Calculator
The full 27.5-year schedule using the IRS mid-month convention — including the month you placed the property in service, which most depreciation calculators ignore and which can change your first-year deduction by a factor of twenty-three.
Your depreciation
| Year | Building | Deduction | Tax saved | Accumulated |
|---|---|---|---|---|
| 1 | $4,806 | $4,806 | $1,153 | $4,806 |
| 2 | $8,873 | $8,873 | $2,129 | $13,679 |
| 3 | $8,873 | $8,873 | $2,129 | $22,552 |
| 4 | $8,873 | $8,873 | $2,129 | $31,424 |
| 5 | $8,873 | $8,873 | $2,129 | $40,297 |
| 6 | $8,873 | $8,873 | $2,129 | $49,170 |
| 7 | $8,873 | $8,873 | $2,129 | $58,042 |
| 8 | $8,873 | $8,873 | $2,129 | $66,915 |
| 9 | $8,873 | $8,873 | $2,129 | $75,788 |
| 10 | $8,873 | $8,873 | $2,129 | $84,661 |
| 11 | $8,873 | $8,873 | $2,129 | $93,533 |
| 12 | $8,873 | $8,873 | $2,129 | $102,406 |
| 13 | $8,873 | $8,873 | $2,129 | $111,279 |
| 14 | $8,873 | $8,873 | $2,129 | $120,152 |
| 15 | $8,873 | $8,873 | $2,129 | $129,024 |
| 16 | $8,873 | $8,873 | $2,129 | $137,897 |
| 17 | $8,873 | $8,873 | $2,129 | $146,770 |
| 18 | $8,873 | $8,873 | $2,129 | $155,642 |
| 19 | $8,873 | $8,873 | $2,129 | $164,515 |
| 20 | $8,873 | $8,873 | $2,129 | $173,388 |
| 21 | $8,873 | $8,873 | $2,129 | $182,261 |
| 22 | $8,873 | $8,873 | $2,129 | $191,133 |
| 23 | $8,873 | $8,873 | $2,129 | $200,006 |
| 24 | $8,873 | $8,873 | $2,129 | $208,879 |
| 25 | $8,873 | $8,873 | $2,129 | $217,752 |
| 26 | $8,873 | $8,873 | $2,129 | $226,624 |
| 27 | $8,873 | $8,873 | $2,129 | $235,497 |
| 28 | $8,503 | $8,503 | $2,041 | $244,000 |
General education, not tax advice. Depreciation interacts with passive activity loss limits, at-risk rules and your other income in ways no calculator can see — take this schedule to a CPA rather than to a return. See our financial disclaimer.
The formula, and the part that gets skipped
(Purchase price + closing costs + improvements − land) ÷ 27.5That is the annual deduction for a full year, and it is where almost every depreciation calculator stops. It is correct for years two through twenty-seven and wrong for year one, because residential rental property uses the mid-month convention.
Under that convention your building is treated as placed in service in the middle of the month it actually was, whatever the date. So the first year earns (12.5 − month) ÷ 12 of a full year's deduction. Close in January and you get 11.5 months. Close in December and you get half a month — on a $250,000 basis, the difference between $8,712 and $379 in the year you file.
This is also why the schedule runs to a 28th or 29th year. The recovery period is 27.5 years of deduction, not 27.5 calendar years, so whatever the short first year did not earn spills into a final stub.
First-year depreciation by month placed in service
The rates below are IRS Publication 946, Appendix A, Table A-6 — the year-one percentages for 27.5-year residential rental property. The dollar column shows them applied to a $250,000 depreciable basis, which is a $312,500 property with a 20% land allocation.
| Placed in service | Months earned | Year-one rate | On $250,000 basis |
|---|---|---|---|
| January | 11.5 | 3.485% | $8,712 |
| February | 10.5 | 3.182% | $7,955 |
| March | 9.5 | 2.879% | $7,197 |
| April | 8.5 | 2.576% | $6,439 |
| May | 7.5 | 2.273% | $5,682 |
| June | 6.5 | 1.970% | $4,924 |
| July | 5.5 | 1.667% | $4,167 |
| August | 4.5 | 1.364% | $3,409 |
| September | 3.5 | 1.061% | $2,652 |
| October | 2.5 | 0.758% | $1,894 |
| November | 1.5 | 0.455% | $1,136 |
| December | 0.5 | 0.152% | $379 |
Years two through twenty-seven are a flat 3.636% of the depreciable basis ($9,091 on this example) regardless of which month you started. Only the first and last years vary.
What goes into the basis
Land is never depreciable, and separating it is the input that moves the number most. The usual method is the county assessor's allocation: take the assessor's land value as a share of total assessed value and apply that percentage to what you paid. It is defensible because it comes from a third party, and it takes two minutes to look up.
Some closing costs add to basis and some do not. Title fees, legal fees, recording fees, transfer taxes, surveys and owner's title insurance are capitalized into basis and depreciated with the building. Loan origination points, appraisal fees required by the lender, and prepaid escrows for taxes and insurance are not — they are amortized over the loan or deducted separately.
Improvements before renting go into basis; repairs after do not. Work done to get the property ready to rent is capitalized. Once it is placed in service, the distinction becomes the repair versus improvement test, where a repair is deducted in full that year and an improvement starts its own depreciation schedule.
Recapture: the bill at the other end
Depreciation is not free money — it is a deduction now against a larger taxable gain later. Every dollar you depreciate reduces your basis, which increases your gain when you sell.
At sale, the portion of gain attributable to depreciation on the building is unrecaptured Section 1250 gain, taxed at your ordinary rate up to a 25% ceiling. Gain beyond that is a long-term capital gain at 0%, 15% or 20%. Components reclassified by a cost segregation study are Section 1245 property and recaptured at ordinary rates with no ceiling at all.
The rule almost nobody states plainly: recapture applies to depreciation allowed or allowable. The IRS reduces your basis by the depreciation you were entitled to take whether you took it or not. Choosing not to depreciate does not avoid the recapture tax — it means paying the tax without ever having had the deduction. If prior years were missed, Form 3115 is the usual correction, and it is a conversation for a CPA rather than a spreadsheet.
A 1031 exchange defers the whole calculation into the replacement property rather than eliminating it, and the 3.8% net investment income tax can apply on top for higher earners.
Common questions
How is rental property depreciation calculated?
Take the purchase price plus capitalized closing costs and improvements, subtract the value of the land, and divide the rest over 27.5 years using straight-line depreciation. The catch is year one: residential rental property uses the mid-month convention, so you only depreciate from the middle of the month the property was placed in service. A property placed in service in January earns 11.5 months of depreciation in year one; one placed in December earns half a month. That makes the first-year rate anywhere from 3.485% down to 0.152% of the depreciable basis.
What is the mid-month convention for rental property?
The IRS treats residential rental property as placed in service at the midpoint of whatever month it actually went into service, regardless of the day. It applies to the building only, not to appliances or land improvements, which use the half-year convention instead. The practical effect is that a partial first year pushes a stub of depreciation into a 28th or 29th calendar year — the recovery period is 27.5 years of deduction, not 27.5 calendar years.
How do I determine land value for depreciation?
The most commonly accepted method is the county assessor's allocation: take the assessor's land value as a percentage of its total assessed value, then apply that percentage to what you actually paid. A tax assessment showing $40,000 land against $160,000 total means 20% land, so a $300,000 purchase allocates $60,000 to land. Land is never depreciable, and allocating too little to it is one of the more visible errors on a return.
What happens if I don't claim depreciation on my rental property?
You still owe the recapture tax. Depreciation is recaptured at sale on the amount allowed or allowable, which means the IRS reduces your basis by the depreciation you could have claimed whether or not you actually claimed it. Skipping depreciation does not avoid the tax — it means paying the tax without ever having received the deduction. If depreciation was missed in prior years, Form 3115 is the usual route to correcting it, which is a CPA conversation.
How much is depreciation recapture tax?
Unrecaptured Section 1250 gain — the part attributable to depreciation on the building — is taxed at your ordinary income rate capped at 25%. It is a ceiling, not a flat rate, so a taxpayer in a lower bracket pays their bracket. Any gain above the depreciation taken is taxed as a long-term capital gain at 0%, 15% or 20%. Components carved out by a cost segregation study are Section 1245 property and are recaptured at ordinary rates with no 25% cap at all.
Can you depreciate a rental property for more than 27.5 years?
The schedule runs into a 28th or 29th calendar year, but it never exceeds 27.5 years of total deduction. Because year one is partial under the mid-month convention, the months it did not earn spill into a final stub year. A property placed in service in July takes 5.5 months in year one, 27 full years after it, and half a month in year 29.
Is cost segregation worth it on a rental property?
It depends far more on your hold period than on the size of the deduction. Cost segregation pulls deductions forward by reclassifying components into 5-year and 15-year property, which is a timing advantage. But those components are Section 1245 property, recaptured at ordinary income rates with no 25% cap, while the building they came out of would have been capped. On a short hold that trade can cost more than it saves, and a study itself typically costs several thousand dollars.
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Everything on this page is general education, not tax advice. Depreciation interacts with passive activity loss limits, at-risk rules, and the rest of your return in ways a calculator cannot see. See our financial disclaimer.