Calculate IRS straight-line depreciation for residential and commercial rental property.
This calculator uses straight-line depreciation with mid-month convention per IRS Pub 946. Cost segregation estimates are simplified. Actual savings depend on your tax bracket and filing status. This is not tax advice — consult a CPA.
Depreciation lets landlords deduct a building's cost as it "wears out." The IRS requires straight-line depreciation on most real estate: annual deduction = depreciable basis ÷ recovery period, where the recovery period is 27.5 yearsfor residential rental and 39 years for commercial. Land is never depreciable, and a mid-month convention rules the first year — you only get a half-month of depreciation for the month the property entered service, so a July placement yields 5.5 months in year one. The deduction shelters rental income from ordinary tax (24% in the example), but accumulated depreciation is recaptured at up to 25% when you sell.
$400,000 purchase: land ($100,000) is carved out, leaving $300,000 of depreciable basis. The bars show equal $10,909 deductions each year with a shorter, mid-month first year.
Andre placed a residential rental building in service in July 2026. He paid $400,000 total — $100,000 for the land and $300,000 for the building — and is in the 24% tax bracket.
To calculate rental depreciation: enter purchase price, land value, and in-service date — the tool applies 27.5-year residential or 39-year commercial straight-line depreciation with the mid-month convention and a full annual schedule.
FreeToolHub Property Depreciation Calculator is a free browser-based tool that computes IRS Section 168 rental property depreciation, no signup.
Calculate your annual property depreciation deduction using the IRS schedule. Free, accurate.
This calculator applies IRS Section 168 rules to residential and commercial real estate. You enter purchase price, land value, closing costs allocated to the building, and the in-service date, then choose residential rental (27.5-year) or commercial (39-year) class life. The engine applies the mid-month convention that the IRS requires, so a building placed in service in any month depreciates half a month regardless of the exact day, and returns the annual depreciation deduction, the year-one prorated amount, the month-by-month schedule for year one, and the full 27.5 or 39-year table. A cost-segregation estimate shows how much additional first-year deduction is typical when 5-, 7-, and 15-year personal property components like carpets, appliances, and land improvements are accelerated, plus the tax savings at your marginal rate.
Rental property owners preparing Schedule E use it to compute the depreciation deduction without paying for a full CPA engagement. Investors analyzing a purchase before closing see how depreciation sheltered by passive income improves actual cash-on-cash return. Short-term rental hosts who materially participate and can take the deduction against ordinary income check what their first-year write-off looks like. Real estate agents and lenders use it to explain to clients why after-tax yield beats the naive cap rate. Anyone considering a cost-segregation study gets a screening estimate of whether the engineering study fee, typically $2,000 to $5,000, pays for itself in accelerated deductions.
(1) Enter the purchase price and the county-assessed or appraised land value; only the building portion depreciates, so this split matters more than any other input. (2) Add capitalized closing costs such as title fees, legal fees, and transfer taxes, which increase the depreciable basis, while loan points and escrow prepaids do not. (3) Pick the in-service date, the day the property was ready and available for rent, not the closing date. (4) The tool applies the correct recovery period and mid-month convention, prints year-one and steady-state annual deductions, and totals cumulative depreciation through any future year you select, which is the number you need for basis and eventual depreciation-recapture planning at sale.
Depreciation is a loan from the IRS, not a gift. Allowed-or-allowable depreciation is recaptured at sale, taxed up to 25 percent on the straight-line portion that applied to real property, while any gain above original basis is taxed at capital-gains rates. This calculator's cumulative-depreciation total is exactly the recapture exposure to plan around. Common exit strategies include a 1031 exchange into another investment property, which defers both recapture and capital gain, converting to full rental use before selling a former primary residence, or holding until step-up at death. A mid-stream note: land never depreciates, and improvements such as a new roof are depreciated separately over their own class life rather than expensed, which is why keeping the basis split accurate each year saves expensive reconstruction work later.
US tax law requires 27.5 years for residential rental property and 39 years for commercial property under MACRS straight-line depreciation, using the mid-month convention in year one.
No. Land never depreciates for tax purposes. Only the building and capital improvements depreciate, so an accurate purchase-price allocation between land and structure is the single most important input.
The IRS mid-month convention treats property placed in service during any month as in service for half that month, regardless of the actual day. A rental bought in June gets 6.5 months of depreciation in year one for a 27.5-year property.
Depreciation you took or could have taken is recaptured at sale, taxed up to 25% on real-property straight-line depreciation, while remaining gain is taxed at capital-gains rates. A 1031 exchange defers both.
The IRS requires straight-line depreciation over 27.5 years for residential property (39 years for commercial). Divide your building basis (purchase price minus land value) by 27.5 to get your annual deduction. A $300,000 building with $60,000 land yields $8,727 per year in depreciation expense.
The IRS recaptures depreciation at 25% tax on the total amount you deducted over the ownership period. If you claimed $87,270 in depreciation over 10 years, you owe roughly $21,818 in recapture tax at sale. This tool projects both the annual benefit and the eventual recapture liability.
What do you call a crab that plays baseball?
No paywalls, no signups, no data sold. Built by a solo developer who believes useful tools should be accessible to everyone.
☕Support me on Ko-fi— keep tools free100% of proceeds go towards hosting & building more free tools.