Landlord Numbers

Home › Depreciation calculator

Rental property depreciation calculator (27.5-year)

Residential rental buildings are depreciated over 27.5 years, straight-line, using the mid-month convention. Land is never depreciated.

Basis
Title, recording, transfer taxes, etc.
Check your property tax assessment for the land/building split
Placed in service

Depreciation

Depreciable basis (building)–
Full-year deduction–
First-year %–
Final year of schedule–
First-year deduction (Schedule E line 18)–

Full schedule below ↓

Full schedule

#Tax yearMonthsDepreciationAccumulatedRemaining

How the 27.5-year mid-month calculation works

Basis = price + capitalized closing costs + improvements − land
Full year = basis ÷ 27.5
First year = basis ÷ 27.5 × (12 − month + 0.5) ÷ 12

Under the mid-month convention, the property is treated as placed in service in the middle of its month. A property placed in service in January gets 11.5 months the first year (3.485% of basis, matching IRS Pub 946 Table A-6). April gives 2.576%, July 1.667% and December 0.152%. Every full year after that is 3.636%. Whatever is left over is deducted in year 28 or 29.

Example: a $275,000 building basis gives $10,000 a year. Placed in service in January, the first year is $9,583.33.

This calculator assumes the property is held all year. In the year you sell, the mid-month convention applies again. It doesn't model bonus depreciation, Section 179, or cost segregation. Not tax advice.

Related calculators

Depreciation recaptureEstimate tax when you sell a rental.ROI & IRR calculatorHold-and-sell projection with IRR and equity multiple.Cash flow calculatorMonthly NOI, mortgage, cash flow and DSCR.

FAQ

Why 27.5 years?

The IRS sets a 27.5-year recovery period under GDS for residential rental property (buildings where 80% or more of the rental income comes from dwelling units). See Publication 527 and Publication 946.

Can I depreciate the land?

No. Land doesn't wear out, so only the building is depreciated. Many owners use the land/building ratio from their property tax assessment to split the purchase price.

When does depreciation start?

When the property is placed in service, meaning ready and available to rent, not when you bought it or when the first tenant moved in.

Where does this go on my tax return?

Annual depreciation is reported on Form 4562 when required and carried to Schedule E, line 18, for that property.