Rental Property Depreciation Calculator: 27.5-Year Schedule

Work out your depreciable basis, the first-year deduction for the month you placed the rental in service, the yearly write-off and the full schedule

By the Monthly Income Booster editorial team · Updated 2026-10-11 · How we research and fact-check

Rental property depreciation is the building's cost (not the land) divided by 27.5 years, with a smaller first year based on the month you placed it in service. A $300,000 rental with $6,000 of closing costs and 20% land value has a $244,800 depreciable basis: $8,902 a year, and $8,531 in a first year that starts in January. Enter your numbers to see your own deduction and the full schedule.

The formula IRS Publication 527 uses

Residential rental property is depreciated under MACRS GDS over 27.5 years, straight line, with the mid-month convention (IRS Publication 527, chapter 2; Publication 946). Depreciable basis = (purchase price + settlement costs you must capitalize + improvements) × building share. Yearly depreciation = basis ÷ 27.5 = 3.636% of basis. In the first year you get (12 − month + 0.5) ÷ 12 of that, because the property is treated as placed in service in the middle of its month. The remainder is taken in year 28 (or 29), so the full basis is recovered.

First-year depreciation by month placed in service (Pub 527 Table 2-2d), $244,800 basis
Month placed in service	Year 1 rate	Year 1 deduction
January	3.485%	$8,531
February	3.182%	$7,789
March	2.879%	$7,047
April	2.576%	$6,305
May	2.273%	$5,564
June	1.970%	$4,822
July	1.667%	$4,080
August	1.364%	$3,338
September	1.061%	$2,596
October	0.758%	$1,855
November	0.455%	$1,113
December	0.152%	$371

Separating land from the building

Land never wears out, so it is never depreciated. Split the total cost using the county assessor's land and improvement values (their ratio is what most taxpayers and preparers use) or an appraisal. In many suburbs land is 15% to 30% of the value; in expensive cities it can be more than half. A higher land share lowers the deduction.

Deductions by purchase price

Assuming 2% closing costs, 20% land and a 22% tax bracket. The tax saving is a rough estimate: rental losses can be limited by the passive activity rules, and depreciation reduces your basis.

Yearly depreciation by purchase price
Price	Depreciable basis	Yearly depreciation	Tax saved at 22%
$200,000	$163,200	$5,935	$1,306
$300,000	$244,800	$8,902	$1,958
$400,000	$326,400	$11,869	$2,611
$500,000	$408,000	$14,836	$3,264
$750,000	$612,000	$22,255	$4,896

Depreciation recapture when you sell

Depreciation you took (or could have taken) is taxed when you sell, as unrecaptured section 1250 gain at a maximum rate of 25% (IRS Topic 409). After 10 years on the example, about $88,647 of depreciation has been taken; at 25% that is up to $22,162 of tax on sale, on top of capital gains tax on any appreciation. A 1031 exchange can defer it.

Depreciating the land Only the building and improvements are depreciable. Using the full price overstates the deduction.
Starting at the purchase date Depreciation starts when the property is ready and available to rent (placed in service), not when you closed.
Skipping depreciation to avoid recapture Recapture applies to depreciation allowed or allowable, so skipping it doesn't avoid the tax on sale; it only loses the deduction.
Expensing improvements A new roof or addition is a capital improvement with its own 27.5-year schedule from the month it's placed in service; repairs are deducted in the year paid.

Where it goes on your return

Depreciation is figured on Form 4562 in the first year and reported with your rental income and expenses on Schedule E. This calculator is an estimate for planning; a tax professional can confirm your basis, land allocation and any cost segregation.

Frequently asked questions

How do you calculate depreciation on a rental property?

Take the purchase price plus capitalized closing costs and improvements, subtract the land value, and divide by 27.5. $244,800 of building basis gives $8,902 a year.

Why 27.5 years?

That is the recovery period the IRS sets for residential rental property under MACRS GDS (Publication 527). Commercial buildings use 39 years.

How much depreciation do I get in the first year?

It depends on the month the rental was placed in service: 3.485% of basis for January down to 0.152% for December (Table 2-2d), because of the mid-month convention.

Are closing costs part of the basis?

Many are: title fees, recording fees, transfer taxes, legal fees and survey costs are added to basis. Loan costs such as points are amortized over the loan instead, and prepaid tax and insurance are deducted as expenses (Publication 527).

What is depreciation recapture?

When you sell, the depreciation you took is taxed as unrecaptured section 1250 gain at up to 25%. It is the trade-off for the yearly deduction.

Can depreciation create a loss?

Yes, it can push a cash-flowing rental to a tax loss. Passive activity rules limit how much of that loss you can use against other income; there is a special allowance of up to $25,000 for active participants, phased out at higher incomes (Publication 527).

Official sources

Tax rules, limits and pay data change. Check the current figures with the primary source before acting on them.