Calculateus

Rental Property Depreciation Calculator

Calculate the annual depreciation deduction for a residential rental property.

Result

Annual Depreciation Deduction
$9,090.91
Monthly Equivalent
$757.58

Residential rental property is depreciated straight-line over 27.5 years under MACRS. Land itself is never depreciable (it doesn't wear out), so only the building/structure value counts - a common approach is to use the county tax assessor's building-to-land value ratio to split a purchase price.

About the Rental Depreciation Calculator

This calculator computes the annual (and monthly) depreciation deduction for a residential rental property using the straight-line method required under MACRS. It is designed for landlords and real estate investors who need to know how much of their building's value can be deducted each year.

How It Works

You enter the building's value, excluding land, since land is never depreciable. The calculator divides that value evenly across the 27.5-year useful life the IRS assigns to residential rental property, then also shows the equivalent monthly figure by dividing the annual amount by 12.

annualDepreciation = buildingValue / 27.5; monthlyDepreciation = annualDepreciation / 12.

Formula & Methodology

Residential rental real estate depreciates using the straight-line method under MACRS, meaning the same dollar amount is deducted every year rather than a declining balance. Dividing the building's cost basis by 27.5 years produces that constant annual deduction; dividing again by 12 shows what that translates to on a monthly basis, useful for cash flow projections.

Examples

Typical single-family rental

A rental property has a building value (excluding land) of $250,000. Dividing by 27.5 years gives an annual depreciation deduction of about $9,091, or roughly $758 per month.

Smaller condo unit

An investor owns a rental condo with a building value of $137,500 after excluding the land portion. The annual depreciation deduction comes to exactly $5,000, or about $417 per month.

Advantages

  • Applies the exact 27.5-year residential rate the IRS requires, removing the need to look up or calculate the percentage manually.
  • Shows both an annual and a monthly figure, useful for both tax planning and month-to-month cash flow analysis.
  • Highlights the importance of separating land value from building value, since only the latter is depreciable.

Common Mistakes

  • Entering the full purchase price (including land) instead of just the building value, which overstates the allowable depreciation deduction.
  • Forgetting that depreciation deductions reduce cost basis and increase taxable gain at sale, sometimes triggering unrecaptured Section 1250 gain at a higher rate than ordinary capital gains.
  • Assuming depreciation is fully available in the calendar year of purchase or sale, when actual MACRS residential rules prorate the first and last year using a mid-month convention.

Edge Cases to Watch For

  • Only the building value counts; land value must be excluded before entering a figure, typically estimated using a county tax assessor's building-to-land ratio applied to the purchase price.
  • The calculator does not prorate the first or final year of ownership, even though real MACRS residential rules use a mid-month convention that reduces the deduction in the month of purchase and sale.
  • Depreciation claimed over time reduces your cost basis in the property, which increases taxable gain when the property is eventually sold and can trigger unrecaptured Section 1250 gain taxed at up to 25%, a consequence not modeled by this calculator.
  • The tool assumes a single flat 27.5-year schedule for the entire holding period and does not account for major capital improvements added partway through ownership, which would depreciate on their own separate schedule.

Common Use Cases

  • Landlords calculating their annual rental depreciation deduction for tax filing purposes.
  • Real estate investors evaluating projected after-tax cash flow before purchasing a rental property.
  • Accountants and tax preparers verifying a client's straight-line depreciation figure on residential rental real estate.
Written & fact-checked by the Calculateus TeamLast updated August 5, 2026How we verify our formulas

Frequently asked questions

Why does rental property depreciation eventually get "recaptured" when sold?

Depreciation deductions reduce your cost basis in the property over time, which increases your taxable gain when you eventually sell, and the portion of gain attributable to depreciation you claimed is taxed as "unrecaptured Section 1250 gain" at a rate up to 25% (higher than standard long-term capital gains rates) - this recapture rule prevents taxpayers from getting a double benefit from both the annual deductions and a fully tax-favored gain at sale.

Related calculators

Income Tax EstimatorEstimate your US federal income tax using 2025 marginal tax brackets.Self-Employment Tax CalculatorEstimate self-employment tax (Social Security + Medicare) on your net earnings.Sales Tax CalculatorCalculate sales tax and total price for a purchase.VAT CalculatorAdd or remove VAT from a price.

Related articles

Effective vs. Marginal Tax Rate: Why They're So DifferentThese two numbers are often confused, but they answer completely different questions. Here's how to calculate both correctly.What Your Marginal Tax Rate Actually MeansYour marginal tax rate is the rate on your next dollar of income, not your whole income. Here's why that distinction matters so much.How Property Tax Is Calculated on Your HomeProperty tax is based on assessed value, not market value — and the two aren't always the same number. Here's how it actually works.

Conclusion

The Rental Property Depreciation Calculator applies the standard 27.5-year straight-line MACRS method to the building portion of a rental property's value. It gives a clean baseline deduction figure, though the mid-month convention for partial years and depreciation recapture at sale are factors to account for separately.

References