Property Depreciation Schedule Calculator

Property depreciation is one of the most powerful tax advantages available to real estate investors. It allows you to deduct the cost of a building — not land — over its IRS-defined useful life, reducing your taxable income each year even if the property is actually appreciating in value.

MACRS Straight-Line Formula:

Annual Depreciation = Depreciable Basis / Recovery Period

Depreciable Basis = Purchase Price − Land Value + Capital Improvements

Recovery periods under MACRS:

• Residential rental property: 27.5 years
• Commercial property: 39 years
• Land: Not depreciable — ever

Worked example: You purchase a residential rental for $350,000. An appraiser values the land at $70,000 (20% of purchase price). Depreciable basis = $350,000 − $70,000 = $280,000 Annual depreciation = $280,000 / 27.5 = $10,182/year Monthly non-cash deduction = $849/month

Mid-month convention: In the first and last year of ownership, the IRS requires using the mid-month convention — you only claim half a month’s depreciation in the month you acquire or dispose of the property.

Key rules and gotchas:

• Land value is typically estimated at 15–25% of total property value, or sourced from the tax assessor’s office
• Capital improvements (new roof, HVAC, additions) are depreciated separately — often on different schedules
• Cost segregation studies identify components (appliances, flooring, landscaping) that qualify for 5-, 7-, or 15-year accelerated depreciation
• When you sell, the IRS recaptures depreciation you claimed and taxes it at up to 25% (Section 1250 recapture)
• You can continue depreciating even if the property’s market value is rising

Reference: Annual depreciation by basis and property type:

This calculator generates your full depreciation schedule year-by-year, so you can plan ahead and maximize your tax benefits.