Real Estate Depreciation Calculator
Calculate tax deductions from property depreciation using different methods
Tax Disclaimer: This calculator provides estimates for educational purposes only. Tax laws change frequently and vary by location. Consult with a qualified tax professional for advice specific to your situation.
Tip: For rental properties, only the building value (not land) can be depreciated.
Property Information
Tax Information
Depreciation Analysis
Depreciable Basis:
Annual Depreciation:
Total Projected Deductions:
Estimated Tax Savings:
$0
$0
$0
$0
Year-by-Year Depreciation
| Year | Depreciation | Accumulated | Remaining | Tax Savings |
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Understanding Depreciation Methods
MACRS (Modified Accelerated Cost Recovery System)
The standard method for residential rental properties in the US. Depreciates property over 27.5 years using a declining balance method that front-loads deductions.
Key Feature: Larger deductions in early years, smaller in later years
Straight-Line Depreciation
Simpler method that deducts equal amounts each year over 27.5 years for residential or 39 years for commercial properties.
Key Feature: Consistent annual deductions
Commercial Property Depreciation
Non-residential real estate must be depreciated over 39 years using either straight-line or MACRS method.
Key Feature: Longer depreciation period means smaller annual deductions
Tax Tip: The first year of depreciation is prorated based on when the property was placed in service. Our calculator automatically handles this proration.
Maximizing Tax Benefits
Cost Segregation
- Allows faster depreciation of certain components (5-15 years)
- Can significantly increase first-year deductions
- Requires professional analysis (typically $3,000-$10,000)
Bonus Depreciation
- Allows immediate deduction of certain improvements
- Percentage phases down annually through 2026
- Can be combined with cost segregation
Important: Tax laws change frequently. The Tax Cuts and Jobs Act (2017) made significant changes to depreciation rules that our calculator incorporates.
Frequently Asked Questions
What property types qualify for depreciation?
Rental properties, commercial buildings, and income-producing improvements qualify. Land and personal residences do not. The property must have a determinable useful life that's longer than one year.
How does depreciation recapture work when I sell?
When you sell, accumulated depreciation is "recaptured" and taxed at a maximum 25% rate (higher than capital gains). A 1031 exchange can defer this tax by reinvesting in another property.
Can I depreciate a property I'm living in?
No, only the portion used for rental/business purposes can be depreciated. If you convert a personal residence to rental, your depreciable basis is the lower of cost or market value at conversion.
What's the difference between depreciation and amortization?
Depreciation applies to tangible assets (buildings, improvements) while amortization applies to intangible assets (loan costs, leasehold improvements). Both provide similar tax benefits.
How do improvements affect depreciation?
Capital improvements are added to your depreciable basis and depreciated separately. Some qualify for bonus depreciation or shorter recovery periods through cost segregation studies.