Find your annual IRS depreciation deduction in seconds. Reduces your taxable income without touching your cash flow — one of the best benefits of owning rental property.
Property Details
$5,818
Annual Depreciation Deduction
$160,000
Depreciable Basis
$0
Cumulative to Date
$160,000
Remaining Basis
Note: The first and last year use the IRS mid-month convention. Your actual first-year deduction will be slightly lower depending on which month the property was placed in service. This calculator shows full-year amounts. Consult your CPA for precise figures.
How to use this calculator
1
Enter purchase price
Use the price you paid, not current market value. The IRS uses your cost basis, not appraised value.
2
Set land percentage
Check your county assessor's records for a land-to-improvement split. Land is never depreciable.
3
Add improvements
Capital improvements (new roof, HVAC, addition) add to your basis. Repairs do not.
The IRS requires residential rental property to be depreciated over exactly 27.5 years using straight-line depreciation. The same amount is deducted every year. This is a paper deduction — it reduces your taxable income without reducing your cash flow.
Typical land value by market type
Market Type
Typical Land %
Example
Rural / Small town
5% - 15%
Midwest farmland adjacent markets
Secondary Midwest cities
15% - 25%
Indianapolis, Columbus, Kansas City
Sun Belt metros
20% - 35%
Atlanta, Charlotte, Nashville
Coastal primary markets
35% - 55%
Miami, LA, NYC suburbs
Urban infill / dense city
50% - 70%
Manhattan, San Francisco core
Always verify with county assessor records or a certified appraisal. The IRS prefers you use the assessor's allocation when available.
Common depreciation mistakes
Using market value instead of cost basis
Depreciation is based on what you paid, not what the property is worth today. If you paid $180,000 for a property now worth $250,000, your basis is still $180,000.
Not separating land from the structure
Using 100% of purchase price as your depreciable basis is incorrect and could trigger IRS scrutiny. Always allocate land separately using assessor records.
Confusing repairs with capital improvements
Fixing a leaky faucet is a repair — fully deductible in the year paid. Replacing the entire roof is a capital improvement — added to basis and depreciated. The distinction matters a lot.
Forgetting depreciation recapture
When you sell, all depreciation claimed is subject to recapture tax up to 25%. A 1031 exchange defers this indefinitely. Factor this into your exit strategy from day one.
Stop tracking depreciation in a spreadsheet
DoorVault tracks your property basis, capital improvements, and annual depreciation automatically. Export a clean depreciation schedule for your CPA at tax time.
Residential rental property is depreciated over 27.5 years using the straight-line method. The clock starts the month the property is placed in service. The first and last year use a mid-month convention, so they may be partial-year deductions.
What is the depreciable basis of a rental property?
Depreciable basis = (Purchase Price x (1 - Land %)) + Capital Improvements. Land is excluded because it does not wear out. Certain closing costs and fees can also be added to basis. Your basis is what you paid, not current market value.
Can you depreciate land?
No. Land does not deteriorate, so the IRS prohibits depreciation on it. You must separate your purchase price into land and structure components. County assessor records are the most common source for this allocation.
What happens after 27.5 years of depreciation?
Once the depreciable basis is fully recovered, annual depreciation deductions stop. If you sell, all previously claimed depreciation may be subject to depreciation recapture tax at up to 25%. A 1031 exchange can defer both capital gains and recapture tax indefinitely.