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Rental Property Depreciation Calculator

Find the yearly depreciation deduction for a residential or commercial rental building from IRS Publication 946 tables, with a full schedule.

What this tool does

Find the yearly depreciation deduction for a residential or commercial rental building from IRS Publication 946 tables, with a full schedule. You fill in these fields: Purchase price, Land value, Property type, and Month placed in service. It shows first-year depreciation, depreciable basis, full-year depreciation, final-year depreciation, and tax years with a deduction, plus a table (depreciation schedule) and a bar chart (depreciation by tax year).

Inputs

  • Purchase price (USD): A number. Must be at least 0. Include settlement costs that are added to the cost of the property, such as legal and recording fees.
  • Land value (USD): A number. Must be at least 0. Land is not depreciable. Enter 0 if the price is for the building alone.
  • Property type: Choose one: Residential rental (27.5 years), Nonresidential real property (39 years). Starts as Residential rental (27.5 years).
  • Month placed in service: Choose one from 12 options, including January, February, March, April, May, June. Starts as January. The month the property was ready and available to rent.

How to use

  1. Enter the purchase price in USD.
  2. Enter the land value in USD.
  3. Choose Residential rental (27.5 years) or Nonresidential real property (39 years) for "Property type".
  4. Choose an option for "Month placed in service".
  5. Read the result: first-year depreciation, depreciable basis, full-year depreciation, final-year depreciation, and tax years with a deduction, plus a table (depreciation schedule) and a bar chart (depreciation by tax year). It appears once every required field has a valid value.

Worked examples

Example 1. Inputs:

  • Purchase price: 350,000 USD
  • Land value: 75,000 USD
  • Property type: Residential rental (27.5 years)
  • Month placed in service: January

Results:

  • First-year depreciation: $9,583.75 (3.485% of the depreciable basis (Table A-6))
  • Depreciable basis: $275,000.00 (Purchase price minus land)
  • Full-year depreciation: $9,999.00 (3.636% in a middle year)
  • Final-year depreciation: $5,417.50 (1.970% in tax year 28)
  • Tax years with a deduction: 28 (Recovery period 27.5 years)
  • Depreciation schedule, row 1 of 28: Tax year 1; Percentage 3.485; Depreciation $9,583.75; Accumulated $9,583.75; Remaining basis $265,416.25
  • Depreciation schedule, row 2 of 28: Tax year 2; Percentage 3.636; Depreciation $9,999.00; Accumulated $19,582.75; Remaining basis $255,417.25
  • Depreciation schedule, row 3 of 28: Tax year 3; Percentage 3.636; Depreciation $9,999.00; Accumulated $29,581.75; Remaining basis $245,418.25
  • Note: Tax year 1 is the year the property was placed in service. The percentages are the IRS Publication 946 Appendix A tables, so the schedule adds up to the depreciable basis.

How this is worked out: Basis = 350,000 - 75,000 = 275,000. IRS Pub 946 Table A-6 (27.5 year residential rental, mid-month), month column 1 (January): year 1 = 3.485 percent, 275,000 x 0.03485 = 9,583.75. Years 2 to 9 = 3.636 percent, 275,000 x 0.03636 = 9,999.00. Last row is year 28 at 1.97 percent (year 29 is 0 for January), 275,000 x 0.0197 = 5,417.50. Check: 3.485 + 8 x 3.636 + 9 x 3.637 + 9 x 3.636 + 1.97 = 100.000, so the total is 275,000.

Example 2. Inputs:

  • Purchase price: 350,000 USD
  • Land value: 75,000 USD
  • Property type: Residential rental (27.5 years)
  • Month placed in service: July

Results:

  • First-year depreciation: $4,584.25 (1.667% of the depreciable basis (Table A-6))
  • Depreciable basis: $275,000.00 (Purchase price minus land)
  • Full-year depreciation: $9,999.00 (3.636% in a middle year)
  • Final-year depreciation: $418.00 (0.152% in tax year 29)
  • Tax years with a deduction: 29 (Recovery period 27.5 years)
  • Depreciation schedule, row 1 of 29: Tax year 1; Percentage 1.667; Depreciation $4,584.25; Accumulated $4,584.25; Remaining basis $270,415.75
  • Depreciation schedule, row 2 of 29: Tax year 2; Percentage 3.636; Depreciation $9,999.00; Accumulated $14,583.25; Remaining basis $260,416.75
  • Depreciation schedule, row 3 of 29: Tax year 3; Percentage 3.636; Depreciation $9,999.00; Accumulated $24,582.25; Remaining basis $250,417.75
  • Note: Tax year 1 is the year the property was placed in service. The percentages are the IRS Publication 946 Appendix A tables, so the schedule adds up to the depreciable basis.

How this is worked out: Basis 275,000. IRS Pub 946 Table A-6, month column 7 (July): year 1 = 1.667 percent, 275,000 x 0.01667 = 4,584.25. Year 2 = 3.636 percent = 9,999.00. Last row is year 29 at 0.152 percent, 275,000 x 0.00152 = 418.00. Check: 1.667 + 8 x 3.636 + 9 x 3.636 + 9 x 3.637 + 3.636 + 0.152 = 100.000 (years 10 to 27 alternate 3.636 and 3.637 starting with 3.636 in the July column), so the total is 275,000.

Example 3. Inputs:

  • Purchase price: 350,000 USD
  • Land value: 75,000 USD
  • Property type: Nonresidential real property (39 years)
  • Month placed in service: January

Results:

  • First-year depreciation: $6,767.75 (2.461% of the depreciable basis (Table A-7a))
  • Depreciable basis: $275,000.00 (Purchase price minus land)
  • Full-year depreciation: $7,051.00 (2.564% in a middle year)
  • Final-year depreciation: $294.25 (0.107% in tax year 40)
  • Tax years with a deduction: 40 (Recovery period 39 years)
  • Depreciation schedule, row 1 of 40: Tax year 1; Percentage 2.461; Depreciation $6,767.75; Accumulated $6,767.75; Remaining basis $268,232.25
  • Depreciation schedule, row 2 of 40: Tax year 2; Percentage 2.564; Depreciation $7,051.00; Accumulated $13,818.75; Remaining basis $261,181.25
  • Depreciation schedule, row 3 of 40: Tax year 3; Percentage 2.564; Depreciation $7,051.00; Accumulated $20,869.75; Remaining basis $254,130.25
  • Note: Tax year 1 is the year the property was placed in service. The percentages are the IRS Publication 946 Appendix A tables, so the schedule adds up to the depreciable basis.

How this is worked out: Basis 275,000. IRS Pub 946 Table A-7a (39 year nonresidential real property, mid-month), month column 1 (January): year 1 = 2.461 percent, 275,000 x 0.02461 = 6,767.75. Years 2 to 39 = 2.564 percent, 275,000 x 0.02564 = 7,051.00. Year 40 = 0.107 percent, 275,000 x 0.00107 = 294.25. Check: 2.461 + 38 x 2.564 + 0.107 = 100.000, so the total is 275,000.

Example 4. Inputs:

  • Purchase price: 100,000 USD
  • Land value: 0 USD
  • Property type: Nonresidential real property (39 years)
  • Month placed in service: December

Results:

  • First-year depreciation: $107.00 (0.107% of the depreciable basis (Table A-7a))
  • Depreciable basis: $100,000.00 (Purchase price minus land)
  • Full-year depreciation: $2,564.00 (2.564% in a middle year)
  • Final-year depreciation: $2,461.00 (2.461% in tax year 40)
  • Tax years with a deduction: 40 (Recovery period 39 years)
  • Depreciation schedule, row 1 of 40: Tax year 1; Percentage 0.107; Depreciation $107.00; Accumulated $107.00; Remaining basis $99,893.00
  • Depreciation schedule, row 2 of 40: Tax year 2; Percentage 2.564; Depreciation $2,564.00; Accumulated $2,671.00; Remaining basis $97,329.00
  • Depreciation schedule, row 3 of 40: Tax year 3; Percentage 2.564; Depreciation $2,564.00; Accumulated $5,235.00; Remaining basis $94,765.00
  • Note: Tax year 1 is the year the property was placed in service. The percentages are the IRS Publication 946 Appendix A tables, so the schedule adds up to the depreciable basis.

How this is worked out: Basis 100,000 with no land. IRS Pub 946 Table A-7a, month column 12 (December): year 1 = 0.107 percent = 107.00, years 2 to 39 = 2.564 percent = 2,564.00, year 40 = 2.461 percent = 2,461.00. Check: 0.107 + 38 x 2.564 + 2.461 = 100.000.

Limitations

  • Applies the IRS Publication 946 General Depreciation System tables (A-6 and A-7a) for US federal tax only. State rules can differ.
  • Ignores bonus depreciation, Section 179 expensing, cost segregation and the Alternative Depreciation System, and does not cover property placed in service before May 13, 1993 for the 39 year table.
  • Assumes you keep the property for the whole recovery period. If you sell it or stop renting it earlier, the deduction for that year is smaller than the schedule shows, and the tool does not work it out.
  • The month column assumes one building placed in service in the month you pick, a tax year that is the calendar year, and no later improvements added as separate assets.
  • Amounts are the table percentage times the basis and are shown to the cent, so the rows can differ from the total by a cent when you add the rounded figures.
  • This is an estimate of a schedule, not tax advice. Check your figures with a tax professional or the IRS publications.

FAQs

Q: Why is the first year smaller than the other years?
A: The IRS tables use a mid-month convention: the property counts as placed in service in the middle of the month you choose. Placing it in service in January gives 3.485 percent of the basis in year 1 for a residential rental, and July gives 1.667 percent. A middle year is 3.636 percent for residential and 2.564 percent for nonresidential property.
Q: Why does the schedule run one year past 27.5 or 39 years?
A: With the mid-month convention the deduction is spread over parts of 28 tax years for a residential rental placed in service in January through June, 29 tax years for July through December, and 40 tax years for nonresidential property. The tables print the first and last year as partial amounts, and the schedule always adds up to the depreciable basis.
Q: What counts as residential rental property?
A: This tool lets you choose between the 27.5 year table (Table A-6, residential rental property) and the 39 year table (Table A-7a, nonresidential real property). Which one applies to your building is a tax question for IRS Publication 527 or a tax professional.
Q: Why is land excluded?
A: Land is not depreciated. The tool depreciates the purchase price minus the land value you enter, and it needs a land value that is less than the price.
Q: Does this tool calculate depreciation recapture when I sell?
A: No. It shows only the yearly deductions and their running total. Recapture depends on tax rates and your situation, so the tool does not include it.

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