When does depreciation start?

When the property is placed in service, meaning it's ready and available to rent, even if no tenant has moved in yet. It doesn't start on the purchase date if the property still needed work.

Do improvements get depreciated separately?

Yes. Improvements such as a new roof or HVAC system are depreciated as their own assets starting when they're placed in service. Ordinary repairs are deducted in the year you pay for them.

Does this work for commercial property?

No. Nonresidential real property is depreciated over 39 years. This calculator is for residential rental buildings only.

Rental Property Depreciation Calculator

Estimate the depreciation deduction for a residential rental property. Enter what you paid, the land value and the month it was ready to rent. The calculator applies the IRS 27.5-year straight-line method with the mid-month convention.

Purchase price plus closing costs and improvements

Include settlement costs you can add to basis, such as title fees and recording fees.

Value of the land

Land doesn't depreciate. Your appraisal district's land value is a common starting point.

Month the property was ready to rent

Depreciable basis: $0
First-year depreciation: $0
Each full year after: $0

An estimate for general information, not tax advice.

How residential rental depreciation works

Residential rental buildings are depreciated over 27.5 years using the straight-line method. The mid-month convention treats the property as placed in service in the middle of its first month, so the first year gets a partial deduction and every full year after that gets 1/27.5 of the depreciable basis, about 3.636%.

Your depreciable basis is generally the purchase price plus certain closing costs and later improvements, minus the value of the land. Land never depreciates. Your county appraisal district's split between land and improvements is a common starting point.

Why it matters when you sell

Depreciation lowers your tax every year but also lowers your basis. When you sell, the gain from depreciation you were allowed is taxed at up to 25%, even if you never claimed it. So claim it every year. Our guide to rental property taxes explains the rest of the rules.

Frequently asked questions

When does depreciation start?: When the property is placed in service, meaning it's ready and available to rent, even if no tenant has moved in yet. It doesn't start on the purchase date if the property still needed work.
Do improvements get depreciated separately?: Yes. Improvements such as a new roof or HVAC system are depreciated as their own assets starting when they're placed in service. Ordinary repairs are deducted in the year you pay for them.
Does this work for commercial property?: No. Nonresidential real property is depreciated over 39 years. This calculator is for residential rental buildings only.