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Home Depreciation Calculator
Use this free home depreciation calculator to work out the yearly depreciation on a rental property. Enter the property value, the land value, the date the property was placed in service, and the property type, and see the depreciable basis, the annual and monthly deduction, and a cumulative depreciation schedule with a live chart.
| Year | Annual | Cumulative | Remaining basis |
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How it works
When a property is used as a rental, its cost is not deducted all at once. Instead, the cost of the building is spread over its recovery period in equal yearly slices — a method called straight-line depreciation. Each year's slice lowers the owner's taxable rental income, even though the property itself may be rising in market value. That gap between the paper deduction and the real-world value is what makes depreciation one of the most valuable features of owning rental property.
The first step is finding the depreciable basis, which is the property value minus the land value. Land is never depreciated, because land does not wear out, get used up, or become obsolete. If you bought a house for $300,000 and the land is worth $60,000, only the remaining $240,000 is depreciated. Land value often comes from the local tax assessment, which splits a property's assessed value into land and building, or from an appraisal. When no split is available, many owners use the assessment ratio as a reasonable estimate.
Annual depreciation = basis ÷ recovery period
Monthly depreciation = annual depreciation ÷ 12
The recovery period depends on the property type. Residential rental property — a house, apartment building, or other dwelling rented to tenants — is depreciated over 27.5 years. Nonresidential commercial property is depreciated over 39 years. The shorter residential period gives a larger yearly deduction on the same basis: $240,000 divided by 27.5 is $8,727.27 a year, while the same basis divided by 39 is only $6,153.85. The schedule table shows each year side by side with the running total claimed and the basis still left to depreciate, so you can see how the deduction adds up over time.
Two real-world details are simplified here, and you should know about both. First, the first and last years are usually prorated by the month the property was placed in service, under the mid-month convention: a property first rented in October gets only a few months of depreciation in year one, not a full year. This calculator shows full years, so treat year one as the first full year after the placed-in-service date. Second, depreciation is recaptured when you sell: the total you claimed is generally taxed at up to 25 percent, so the deduction is a deferral of tax, not a permanent exemption. Keep the schedule this calculator produces — it is the record you will need at sale time.
Worked example
An owner buys a rental house for $300,000, with land valued at $60,000. It is a residential rental placed in service on January 1, 2025, so the 27.5-year recovery period applies.
Step 1: Depreciable basis — $300,000 − $60,000 = $240,000.
Step 2: Annual depreciation — $240,000 ÷ 27.5 = $8,727.27 a year.
Step 3: Monthly depreciation — $8,727.27 ÷ 12 = $727.27 a month.
Step 4: After 5 years, cumulative depreciation — $8,727.27 × 5 = $43,636.36 claimed.
Step 5: Remaining basis — $240,000 − $43,636.36 = $196,363.64 still to depreciate.
The result is $8,727.27 per year, or $727.27 a month, with $43,636.36 claimed after 5 years. Switch the property type to commercial in the calculator and the same basis gives only $6,153.85 a year — the same building, the same cost, but $2,573.42 less deduction every year.
FAQ
What is rental property depreciation?
Depreciation is a yearly tax deduction that spreads the cost of a rental property over its recovery period, 27.5 years for residential rentals or 39 years for commercial property. You deduct part of the building's cost each year even though the property may be gaining market value, which lowers your taxable rental income.
Can I depreciate the land under my rental property?
No. Land is not depreciable because it does not wear out, so you must subtract the land value from the property value before calculating depreciation. Only the building and improvements are depreciated. Enter your best estimate of the land value, often taken from a tax assessment or an appraisal.
How much depreciation can I claim each year?
Divide the depreciable basis, property value minus land value, by the recovery period. A $240,000 basis on a residential rental gives $8,727.27 a year, or $727.27 a month. The first and last years are usually prorated by the month the property was placed in service, so they are often smaller.
What is the difference between 27.5-year and 39-year depreciation?
Residential rental property is depreciated over 27.5 years, while nonresidential commercial property is depreciated over 39 years. The shorter period gives a larger yearly deduction: a $240,000 basis yields $8,727.27 a year residential, but only $6,153.85 a year commercial.
Do I have to pay back depreciation when I sell?
Yes, in most cases the depreciation you claimed, or could have claimed, is recaptured when you sell, and the recaptured amount is generally taxed at up to 25 percent. Keeping a record of your yearly depreciation schedule is therefore important long after the deduction itself is taken.