Rental property depreciation calculator
The yearly deduction on a rental house, and the tax on that depreciation when you sell.
Every number is an example; the land share must be supported by an appraisal, the tax bill's assessment or the purchase contract. The tax estimate covers only the depreciation part of the gain.
How is rental property depreciated?
IRS Publication 527 says residential rental property must be depreciated with the straight-line method and the mid-month convention, over a recovery period of 27.5 years. Each full year you deduct 1 ÷ 27.5 = 3.636% of the building's cost. Depreciation starts when the property is ready and available for rent, not when you buy it. The mid-month convention treats the property as placed in service in the middle of that month, so the first year is smaller: (12 − month + 0.5) ÷ 12 of a full year. Publication 946, Table A-6, prints the resulting percentages: 3.485% if placed in service in January and 0.152% in December. The calculator reproduces that table by formula, to the cent.
Why is land taken out of the basis?
Land is never depreciated. If the price covers both house and land you must split it. Publication 527 says to allocate by the ratio of each asset's fair market value to the whole, and if you are not certain of the values you can use the assessed values from your property tax bill; its example allocates 85% to the house and 15% to the land from an assessment of $136,000 and $24,000. The land share you enter is a value you must support, not a typical figure: 20% in the form is only an example. Certain closing costs are added to basis (Publication 527 lists them); ask a tax professional what counts.
Worked example from IRS Publication 527
Publication 527's example: a single-family rental bought for $185,000 and placed in service in February, of which the building is $160,000 and the land $25,000. Table A-6 gives 3.182% for February, so the first-year deduction is $160,000 × 0.03182 = $5,091. The calculator gets $5,091 from the formula. From the second year on the deduction is $5,818 a year until the basis is used up in the 28th or 29th year.
What happens in the year I sell?
Publication 946 treats the month of sale as half a month of use. Its example: a house costing $100,000, not counting land, placed in service in July 2023 and sold on March 2, 2025. The 2023 deduction is about $1,667, the full-year 2024 deduction is $3,636, and for 2025 the full-year amount of $3,636 is multiplied by 2.5 ÷ 12 to get $757.50 (the calculator gets $758 because it uses the unrounded 1 ÷ 27.5). In the form, the sale year's deduction is the full-year deduction × (sale month − 0.5) ÷ 12.
What is depreciation recapture and what rate applies?
When you sell, the depreciation you took (or were allowed to take) lowers your basis and so raises your gain. IRS Publication 544 describes unrecaptured section 1250 gain as the part of a long-term capital gain on real property that is due to depreciation, and IRS Topic 409 says it is taxed at a maximum 25% rate. The rest of the gain is taxed at the usual long-term capital gain rates, which this calculator does not compute. The rate is "at most 25%", so someone in a lower bracket can pay less; the form uses the lesser of 25% and the rate you enter, which is our simplification. State tax, the net investment income tax, losses and exchanges are not included. Example from the form: $300,000 plus $6,000 of costs, 20% land, in service in January 2016, sold in June 2026 for $450,000 less $27,000 of selling costs. Depreciation through the sale is $92,727, adjusted basis $213,273, gain $209,727, so $92,727 of the gain is unrecaptured section 1250 gain, taxed here at 24% = $22,255.
Can I skip depreciation to avoid recapture?
Not in a way that helps. Publication 544 speaks of the depreciation allowed or allowable on the property when figuring the part of the gain that is taxed as recapture, and says to keep permanent records of it. In general the deduction you were entitled to lowers your basis whether or not you claimed it, so skipping it gives up the tax saving while the gain stays the same. This is general information; ask a tax professional about your case.
How is this different from the depreciation calculator?
The general depreciation calculator on this site covers straight-line, double-declining and the MACRS half-year classes of Table A-1 (3-, 5-, 7-, 10-, 15- and 20-year property). Residential rental buildings use a different table, A-6, with a monthly convention and a 27.5-year life, which is what this page does. It also follows the deduction through a sale.
What does this calculator leave out?
Furniture, appliances and carpet, which Publication 527 puts in the 5-year class, and land improvements such as fences, which fall in the 15-year class, are separate items on their own schedules. A later addition or improvement is a new item placed in service on its own date. Bonus depreciation, cost segregation, the passive activity rules, the depreciation limits on a loss, a change of use from your own home, and a sale that is partly personal use are not modeled. The calculator also assumes a calendar-year taxpayer and the general depreciation system, not the alternative one.
Estimates for planning only — not financial, tax or legal advice. Your tax professional decides. Sources, checked October 28, 2026: IRS Publication 946 (2025), Table A-6 and the sale-year example in chapter 4; IRS Publication 527 (2025), “Residential rental property,” “Separating cost of land and buildings” and Table 2-2d; IRS Publication 544 (2025), chapters 2 to 4; IRS Topic 409, capital gains and losses (maximum 25% rate on unrecaptured section 1250 gain). See also the depreciation calculator, rental property calculator, capital gains tax calculator and home sale net proceeds calculator. How we check our calculators.