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Work out the yearly depreciation on a residential rental, the smaller first-year amount, and every year of the 27.5-year schedule.
The purchase price plus purchase costs added to basis, such as title fees and transfer taxes.
Land does not depreciate. Your property tax assessment often splits land from building.
The month the property was ready and available to rent, not necessarily the month it was bought.
Yearly deduction (full year)
$8,727.27
First-year deduction
$6,181.82
8.5 months under the mid-month convention
Depreciable basis
$240,000.00
| Tax year | Months | Deduction |
|---|---|---|
| 2026 | 8.5 | $6,181.82 |
| 2027 | 12 | $8,727.27 |
| 2028 | 12 | $8,727.27 |
| 2029 | 12 | $8,727.27 |
| 2030 | 12 | $8,727.27 |
| 2031 | 12 | $8,727.27 |
| 2032 | 12 | $8,727.27 |
| 2033 | 12 | $8,727.27 |
| 2034 | 12 | $8,727.27 |
| 2035 | 12 | $8,727.27 |
| 2036 | 12 | $8,727.27 |
| 2037 | 12 | $8,727.27 |
| 2038 | 12 | $8,727.27 |
| 2039 | 12 | $8,727.27 |
| 2040 | 12 | $8,727.27 |
| 2041 | 12 | $8,727.27 |
| 2042 | 12 | $8,727.27 |
| 2043 | 12 | $8,727.27 |
| 2044 | 12 | $8,727.27 |
| 2045 | 12 | $8,727.27 |
| 2046 | 12 | $8,727.27 |
| 2047 | 12 | $8,727.27 |
| 2048 | 12 | $8,727.27 |
| 2049 | 12 | $8,727.27 |
| 2050 | 12 | $8,727.27 |
| 2051 | 12 | $8,727.27 |
| 2052 | 12 | $8,727.27 |
| 2053 | 9.5 | $6,909.09 |
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In the US, a residential rental building is depreciated in equal amounts over 27.5 years. Each year you deduct the depreciable basis divided by 27.5, which is about 3.636% of it, even though you spent the money in the year you bought the property.
The depreciable basis is what you paid for the property, plus purchase costs that are added to basis, minus the value of the land. Land is never depreciated, so separating it out is the step that most changes the answer.
The first and last years are partial. Under the mid-month convention a property is treated as placed in service halfway through its month, so one bought and ready to rent in April gets 8.5 months of depreciation in its first year.
Include the purchase price and costs such as title insurance, recording and transfer fees, and legal fees for the purchase. Loan costs such as points are generally treated differently, and repairs made after purchase are expenses rather than basis.
Later improvements that add value or extend the property's life, such as a new roof, are depreciated separately over their own 27.5 years from the month they are placed in service.
A landlord buys a rental for $300,000 and adds $6,000 of purchase costs to basis, for a cost basis of $306,000. The land is worth $66,000, leaving a depreciable basis of $240,000. The property is placed in service in April 2026.
The full-year deduction is $240,000 / 27.5 = $8,727.27. In 2026 the property gets 8.5 months, a deduction of $6,181.82. Every year from 2027 through 2052 gets $8,727.27, and the final 9.5 months, $6,909.09, fall in 2053.
This calculator gives an estimate for planning. It is not tax advice: confirm your basis, land value and dates with a tax professional, and note that depreciation can be recaptured when you sell.
Subtract the land value from your cost basis to get the depreciable basis, then divide it by 27.5. That is the full-year deduction; the first year is reduced to the months the property was in service, under the mid-month convention.
It is the recovery period US tax law sets for residential rental property. Commercial buildings use 39 years.
A common source is the property tax assessment, which often splits land from improvements; apply the same land share to your purchase price. An appraisal that values the land separately is another source.
Depreciation reduces your basis whether or not you claim it, and the reduced basis is used when you sell. Skipping it does not avoid the effect at sale, so most landlords take the deduction every year.
In Porchyard you categorize each transaction to the property it belongs to and attach its receipt, so purchase costs and improvements are easy to find when you need them. Try it free for 30 days.