How long do you depreciate rental property?

Under the General Depreciation System (GDS), which covers most U.S. rentals, residential rental property is depreciated straight-line over 27.5 years and commercial property over 39 years. Land cannot be depreciated. A rental located outside the United States, or property of a real-estate business that elected out of the §163(j) business-interest limit, must use the Alternative Depreciation System (ADS) instead: 30 years residential (placed in service after 2017), 40 years nonresidential.

What is the depreciable basis for rental property?

If you bought the property as a rental, your depreciable basis is your cost (purchase price plus capitalized closing costs) allocated to the building. Land is excluded. Later capital improvements are depreciated separately. If you convert your former home or other personal-use property to a rental, the building's basis for depreciation is the lower of its adjusted basis or its fair market value on the conversion date (IRS Pub. 527), and it is placed in service when it becomes available for rent.

Can I depreciate a rental property that appreciated in value?

Yes, depreciation is based on your original cost basis, not current market value (a former home converted to a rental uses the lower of its adjusted basis or fair market value on the conversion date). You must claim depreciation or lose the tax benefit when you sell.

What happens to depreciation when I sell the property?

The depreciation you took (or could have taken) is taxed as 'unrecaptured Section 1250 gain' at your ordinary rate, capped at 25%. It can never exceed your gain on the sale. If your gain is smaller than your depreciation, only the gain is taxed this way, and a sale at a loss has none. Gain above the depreciation is taxed as a long-term capital gain.

How much depreciation can I claim on my rental property?

For residential rental, you can claim 3.636% of your depreciable basis each year (building value ÷ 27.5). A $300K property with $60K land = $240K basis = $8,727/year deduction.

Can landlords write off depreciation?

Yes, landlords must claim depreciation. It's a mandatory deduction that reduces taxable income. Your basis drops by the depreciation allowed or allowable whether you claimed it or not, so skipping it only loses the deduction. Always claim it.

What happens to depreciation when I sell my rental?

The depreciation you took or could have taken ('allowed or allowable') is taxed as unrecaptured Section 1250 gain at your ordinary rate, capped at 25%, but never more than your gain on the sale; a sale at a loss has none. Gain above the depreciation is taxed as a long-term capital gain.

What is the first-year (mid-month) depreciation for a rental?

The IRS applies the mid-month convention: your first-year deduction is prorated based on the month placed in service, meaning the month the property is ready and available for rent, not the closing date. A residential property placed in service in June gets 6.5 months of depreciation in year one (roughly 1.970% of basis), not a full 3.636%.

Does bonus depreciation apply to residential rental buildings?

No — the 27.5-year residential building itself is not bonus-eligible. But short-life components identified through a cost segregation study (5-, 7-, and 15-year property) qualify for bonus depreciation. Under the One Big Beautiful Bill Act (P.L. 119-21), 100% bonus depreciation is permanent for qualified property acquired after January 19, 2025 (a written binding contract signed earlier fixes the acquisition date). Property acquired before January 20, 2025 stays on the old TCJA phase-down: 40% if placed in service in 2025, 20% in 2026.

How is rental depreciation different in 2026 vs prior years?

The 27.5-year residential and 39-year commercial recovery periods (GDS; a foreign residential rental placed in service after 2017 uses 30-year ADS, 40 if before 2018) have not changed for 2026. Bonus depreciation for qualifying cost-segregated short-life property acquired after January 19, 2025 is 100% under OBBB; earlier acquisitions remain on the old 40%/20% phase-down. Section 179 expensing was raised by OBBB to $2.5 million (phase-out beginning at $4 million) for 2025, then inflation-indexed.

Rental Property Depreciation Calculator 2026

Calculate annual MACRS depreciation for the building (27.5-year residential, 39-year commercial) with the mid-month convention. For cost-segregation short-life components and bonus depreciation, use the Cost Segregation Calculator.

How do I calculate rental property depreciation?

Residential rental property is depreciated over 27.5 years using the straight-line MACRS method. Subtract land value from purchase price to get your depreciable basis, then divide by 27.5. A $300,000 property with $60,000 land = $240,000 basis = $8,727/year depreciation deduction.

Residential rental: 27.5 years depreciation period (MACRS GDS)
Commercial property: 39 years depreciation period (GDS)
Land cannot be depreciated — only the building value
Claim it: your basis drops by the depreciation allowed or allowable whether you claimed it or not

Source:IRS Publication 527

Updated August 24, 2026Reviewed for 2025 & 2026 tax yearsIRS-sourcedReviewed by Adam Khale

Our editorial team builds these tools directly from the IRS source material. This calculator uses the exact MACRS formulas required by the IRS for residential and commercial properties.

$8,727

average annual deduction per $300K property

About Our Editorial Process

How do I calculate rental property depreciation?

Residential rental property is depreciated over 27.5 years using the straight-line method. Calculate your annual deduction by subtracting land value from purchase price, then dividing by 27.5. For a $300,000 property with 20% land ($60,000), the annual depreciation is $8,727. A former home converted to a rental starts from the lower of its adjusted basis or fair market value on the conversion date.

•27.5 years for residential, 39 years for commercial (GDS)
•Land is not depreciable—only the building
•Improvements made later are separate assets with their own start date
•Claim it: your basis drops by the depreciation allowed or allowable, claimed or not

Calculate Your Depreciation

Depreciation is the deduction nobody asks for and everybody needs. New landlords skip it because the math feels intimidating. Then they find out at sale time that the IRS recaptures depreciation you should have taken — whether you took it or not. So you might as well take it.

Real-world scenario

A first-year Austin landlord, $385,000 duplex

An Austin landlord buys a duplex for $385,000. The county assessor puts land at 22% of value, so $84,700 is land and $300,300 is the building. Annual depreciation: $300,300 ÷ 27.5 = $10,920 per year. On a 24% marginal bracket that's $2,621 of real tax savings — every year for the next 27.5 years, with zero extra cash outlay.

The part most people miss

At sale, the depreciation you could have taken is taxed at up to 25% (never more than your gain), even if you never claimed it. That's the trap. Filing Form 3115 to catch up missed depreciation is annoying but almost always worth it. If you've owned the property for more than a year and haven't been depreciating, that's the first conversation to have with a CPA.

Selling a rental property? Estimate Section 1250 tax owed at sale with our Depreciation Recapture Calculator. Planning a like-kind swap instead? See the 1031 Exchange Calculator.

Property Details

Purchase Price

Include capitalized closing costs. Former home? Enter the building's lower of adjusted basis or fair market value on the conversion date, and $0 land.

Land Value (Not Depreciable)

Use your county assessor's land/improvement ratio or an appraisal, applied to the total cost above. Land share varies widely by market.

Capital Improvements

Improvement placed-in-service date

Leave blank if the improvements were made before the property was placed in service. A later improvement (a new roof, say) is a separate 27.5- or 39-year asset depreciated from its own date.

Date Placed in Service

The date it was ready and available for rent, not the closing date

Property Type

Enter Your Property Details

Fill in the form to calculate your annual depreciation deduction

About Rental Depreciation

The IRS allows you to deduct the cost of rental property over time. Residential property uses 27.5 years, commercial uses 39 years (GDS). Land cannot be depreciated. A rental outside the United States must use ADS (30 years residential placed in service after 2017, 40 before 2018; 40 nonresidential), which this calculator does not compute.Learn more about rental depreciation rules →15-year MACRS guide →

Sources & References

Primary references used for this content

Publication 527

Residential Rental Property

The IRS's primary guide for landlords

View on irs.gov

Schedule E

Supplemental Income and Loss

Rental, royalty, partnership, and S-corp income

View on irs.gov

Publication 946

How To Depreciate Property

MACRS recovery periods, conventions, and bonus depreciation

View on irs.gov

✓3 primary sources; links re-checked on a weekly rotation by the source watcher

Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.