Rental Property Depreciation Calculator

How to use the calculator

1. Purchase price. What you paid for the property. Add closing costs that belong in basis, such as title insurance, recording fees, transfer taxes and legal fees. Don’t add loan costs or prorated property taxes and interest. If you converted a former home, use the lower of your adjusted basis or the market value when you converted.
2. Land value. The part of the price that’s land. A common method is the land-to-total ratio on your county assessment.
3. Improvements. Capital improvements you made before the rental was placed in service, like a new roof or a kitchen remodel done before listing. Repairs don’t count. Improvements you make later start their own 27.5-year schedule from the month they’re finished, so run the calculator again for each.
4. Placed-in-service month and year. The month the property was ready and available to rent.

The formula

The calculator follows the IRS method for residential rental property (MACRS, general depreciation system):

• Depreciable basis = purchase price + improvements - land value
• Annual depreciation = depreciable basis / 27.5
• First-year depreciation = annual depreciation x (12 - month placed in service + 0.5) / 12

The 0.5 is the mid-month convention. The IRS treats the property as placed in service in the middle of its month, so you get half a month for that month plus every full month after it. A property placed in service in January gets 11.5 months. One placed in service in December gets half a month.

Accumulated to date adds the first-year amount to a full year’s depreciation for each year since, up to the basis.

A worked example

You bought a house in Columbus for $300,000. The county assessment puts 20% of the value in the land, so land is $60,000. Before listing it, you spent $15,000 on a new roof. It was ready to rent in August 2024.

• Depreciable basis: $300,000 + $15,000 - $60,000 = $255,000
• Annual depreciation: $255,000 / 27.5 = $9,272.73
• First year (August, so 4.5 months): $9,272.73 x 4.5 / 12 = $3,477.27
• 2025, a full year: $9,272.73
• Accumulated through the end of 2025: $12,750.00

The IRS percentage table for August rounds to 1.364%, which gives $3,478.20. A dollar of difference is rounding, and your tax software will use the table.

What a good result looks like

A full year’s depreciation should be about 3.636% of your depreciable basis. The first-year figure should fall between 0.152% (December) and 3.485% (January) of basis. If your annual number is close to 1/27.5 of the full purchase price, you probably forgot to take out the land.

Depreciation goes on Schedule E, line 18. In the first year, you also file Form 4562.

What this calculator doesn’t do

• Other asset classes. Appliances, carpet and furniture in a rental are generally 5-year property. Fences, driveways and landscaping are generally 15-year land improvements. Separating them out, including through a cost segregation study, can front-load deductions. Ask your tax preparer.
• Bonus depreciation and Section 179. These rules have changed several times and don’t apply to the building itself. Ask your tax preparer.
• The year you sell. The mid-month convention applies in the year of sale too, and depreciation recapture comes into play.
• Partial personal use. If you use the property yourself part of the year, depreciation is limited to the rental share.
• Whether you can use the loss. Depreciation often creates a paper loss. Passive activity rules limit how much you can deduct against other income, with a $25,000 allowance that phases out between $100,000 and $150,000 of modified adjusted gross income.

The calculator gives you a solid estimate for planning and for checking your return. Your tax preparer should confirm basis and dates before you file.