Finance category
Mortgage, loan, investing, tax, and money calculators.
Real Estate Depreciation Calculator
Estimate annual depreciation on a rental or commercial property. Split purchase price into land (non-depreciable) and building, fold in capitalized closing costs and improvements, and see the tax shield, multi-year totals, and recapture exposure if you sell.
Property and basis
Land is not depreciable. 15%–25% is a common ratio; use county assessor values as support.
Title, legal, transfer tax, etc. that become part of basis.
Roof, HVAC, windows — depreciated with the property.
Uses the IRS mid-month convention for residential and commercial rentals.
Annual depreciation
$13,182
straight-line over 27.5 years
First year (mid-month)
$12,633
$1,098/mo after first year
Annual tax shield
$3,164
at 24% marginal rate
Depreciable basis
$362,500
building + closing + improvements
Depreciation over the hold
Depreciation is a paper expense — it reduces taxable income without reducing cash flow. Keep in mind the IRS recaptures depreciation at up to 25% when you sell unless you 1031 into another property.
Total after 5 years
$65,360
Total after 10 years
$131,269
Recapture if sold after 5 years
$16,340
at 25% max recapture rate
Recapture if sold after 10 years
$32,817
at 25% max recapture rate
Land value (non-depreciable)
$85,000
Building value
$340,000
This calculator uses straight-line depreciation with the IRS mid-month convention for residential (27.5 years) and commercial (39 years) real estate. Cost segregation studies can accelerate depreciation on 5-, 7-, and 15-year components — those aren't modeled here. Consult a tax professional.
EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.
Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.
Learn more about our review process on the EveryCalc methodology page.
How this calculator works
What this page estimates
This Real Estate Depreciation Calculator is built to give a quick, browser-based estimate for real estate depreciation. Estimate annual depreciation on a rental or commercial property. Split purchase price into land (non-depreciable) and building, fold in capitalized closing costs and improvements, and see the tax shield, multi-year totals, and recapture exposure if you sell. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.
Calculation approach
The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.
Example workflow
For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.
Practical checks
- Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
- Run a low, base, and high case when the inputs are estimates.
- Check the related calculators below when the next decision depends on a different assumption.
How to interpret the real estate depreciation result
Best use
Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.
Cross-check
Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.
Watch for
Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.
This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.
Before relying on this real estate depreciation estimate
Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.
Confirm source numbers
Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.
Separate cash flow from total cost
A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.
Run conservative cases
Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.
Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.
How to Use
- Enter the purchase price and an allocation for land — land is not depreciable. The county assessor's ratio is a defensible starting point.
- Select the property type: residential rental depreciates over 27.5 years and commercial property over 39 years under straight-line MACRS.
- Add capitalized closing costs (title, legal, transfer tax) and any capital improvements made at purchase — those increase basis.
- Set months in service for the first year so the calculator applies the IRS mid-month convention.
- Enter your marginal tax bracket to translate annual depreciation into the after-tax dollar impact.
Frequently Asked Questions
How does rental property depreciation work?
The IRS lets you deduct the depreciable basis (building plus capitalized costs and improvements) evenly over 27.5 years for residential rental or 39 years for commercial property. Land is not depreciable. Depreciation is a paper expense — it reduces taxable income without reducing cash flow.
What is the mid-month convention?
The IRS treats real estate as placed in service in the middle of the month regardless of the actual placed-in-service date. That's why the first year's deduction is smaller — it's a fraction of a full year's depreciation based on months in service minus half a month.
Can I deduct more in the first year through cost segregation?
A cost segregation study reclassifies components of the building — appliances, flooring, fixtures, landscaping — into 5-, 7-, and 15-year property that can be depreciated faster, often with bonus depreciation. For larger deals the accelerated deduction can be substantial but requires a qualified engineer's study.
What is depreciation recapture?
When you sell the property, the IRS recaptures the depreciation you claimed at up to a 25% tax rate (the "unrecaptured Section 1250 gain" rate). Recapture applies even if you didn't actually claim depreciation — the IRS assumes you did. A 1031 exchange can defer both the recapture and capital gains.
How do I allocate land vs building?
The safest default is the county assessor's allocation ratio from your property tax bill. An appraisal or a cost segregation study can support a lower land allocation for higher depreciation. Avoid very aggressive allocations — an IRS audit can reassign the split.
Related Calculators
Rental Property Calculator
Drop the annual depreciation into a full rental underwrite to see after-tax cash flow.
1031 Exchange Calculator
Model how 1031 can defer the depreciation recapture the IRS would otherwise collect at sale.
Cap Rate Calculator
Depreciation doesn't affect cap rate — compare the pre-tax return alongside the tax shield.
Cash-on-Cash Return Calculator
Pair depreciation with cash-on-cash return for the full investor picture.
Tax Bracket Calculator
Find your marginal bracket so you can value the depreciation tax shield accurately.
Rehab Budget Calculator
Capital improvements go into depreciable basis — size them here before rolling into depreciation.
More Finance Calculators
Browse all finance →AI Cost Calculator
Compare token costs across OpenAI, Anthropic, and Google AI models. Calculate monthly API spending for GPT-4o, Claude, Gemini, and more.
Tip Calculator
Calculate the perfect tip and split the bill between friends. Choose preset percentages or enter a custom tip amount.
Bill Splitter Calculator
Split an uneven restaurant bill by item, divide tax and tip proportionally, and see exactly who owes whom.
Discount Calculator
Calculate sale price, discount amount, stacked discounts, sales tax, and total savings for any markdown.
Gas Mileage Calculator
Calculate MPG or km/L, estimate trip fuel cost, and compare annual fuel expenses between two vehicles.
Sales Tax Calculator
Add sales tax to a price, reverse-calculate the pre-tax amount from a total, and estimate tax for multiple items on one receipt.
Keep exploring
Next steps in Finance
Previous calculator
Real Estate Commission Calculator
Split total real estate commission between listing and buyer sides, then model the agent's net take-home after brokerage split, referral, and desk fees.
Next calculator
Real Estate Depreciation Recapture Calculator
Depreciation recapture tax — Section 1250 unrecaptured depreciation tax owed at sale of investment property.