Rental Property Depreciation Calculator (27.5- and 39-Year)

Work out the yearly depreciation on a rental house, condo or commercial building, with a land and building split, the mid-month convention and improvements you add later. Free, no signup.

The property
A building is residential rental property if 80% or more of its rent comes from dwelling units.
Title, recording fees, transfer taxes and similar. Not loan fees.
Land is never depreciated.
A common source is your town or county assessment ratio of land to total value.
When it was ready and listed for rent, not the closing date if you fixed it up first.
Improvements added later (optional)

How rental property depreciation works

  • Only the building depreciates. Split your cost between land and building. Many owners use the land-to-total ratio from the town or county assessment.
  • Residential rental property is depreciated over 27.5 years; commercial (nonresidential) property over 39 years, both straight line.
  • Mid-month convention. The first year counts half of the month you place the property in service. A house first ready to rent in April gets 2.576% of the building basis in year 1, then 3.636% a year (IRS Table A-6).
  • It starts when the place is ready and available for rent, not when you buy it or when the first tenant moves in.
  • Improvements get their own schedules. A new roof or addition starts its own 27.5-year (or 39-year) schedule in the month it is done. Appliances, carpet and furniture used in a residential rental are 5-year property, and fences, driveways and landscaping are 15-year property. Those can use bonus depreciation.

Worked example

Say a rental house cost $360,000 plus $5,000 of closing costs. The assessor shows land at 20% of value, so land is $73,000 and the building basis is $292,000. It is ready to rent in April 2026. The 2026 deduction is $292,000 × 2.576% = $7,522. Each full year after that is $292,000 × 3.636% = $10,617.

Connecticut and North Carolina

Straight-line building depreciation is the same on your Connecticut and North Carolina returns as on your federal return. The difference comes if you claim bonus depreciation or Section 179 on improvements or furnishings: Connecticut adds back 100% of bonus (and 80% of Section 179) and gives it back over 4 years; North Carolina adds back 85% of bonus and gives it back over 5 years. Our equipment depreciation calculator shows those add-backs year by year.

Depreciation you skip still counts

When you sell, your basis is reduced by the depreciation you were allowed or allowable, even if you never claimed it. If you missed depreciation in past years, ask a tax preparer about catching it up with Form 3115 rather than amending.

Related: Rental property tax guide · Rental cash flow and tax calculator · All rental and Airbnb tools

Frequently asked questions

How do you calculate depreciation on a rental property?

Take the purchase price plus closing costs that add to basis, subtract the land value, and depreciate the building over 27.5 years (residential) or 39 years (commercial) using the mid-month convention. The first and last years are partial.

How much of a rental property is land?

There is no single IRS percentage. Many owners use the ratio of land value to total value on the property tax assessment, or an appraisal. Keep whatever you rely on with your records.

When does rental depreciation start?

When the property is ready and available for rent, even if no tenant has moved in yet. Time spent fixing it up before it is ready doesn't count.

How are improvements depreciated?

Each improvement starts its own schedule in the month it is placed in service. Structural work like a roof follows the building's 27.5- or 39-year life. Appliances, carpet and furniture in a residential rental are 5-year property, and land improvements like fences and driveways are 15-year property.

Can I take bonus depreciation on a rental house?

Not on the building itself, which has a 27.5-year life. Bonus depreciation can apply to 5- and 15-year items such as appliances, carpet, furniture and land improvements acquired after January 19, 2025. Connecticut and North Carolina add part of it back on the state return.

What happens to depreciation when I sell?

Your basis goes down by the depreciation allowed or allowable. The part of your gain from that depreciation on the building is generally taxed at up to 25% federally (unrecaptured Section 1250 gain), and the rest of the gain at capital gain rates.

Sources (Checked November 2026)

Free education only. Not tax, legal or investment advice, and not a promise of any result. Tax rules change, so confirm with the IRS (irs.gov), the CT Department of Revenue Services (portal.ct.gov/drs), the NC Department of Revenue (ncdor.gov) or your town or county before you act, and ask your tax preparer about your own situation.

Want a second set of eyes on your rental depreciation?

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Enhance Finance LLC · Andrew Nocera, Tax Preparer & Small-Business Finance Consultant. Based in Connecticut and working with North Carolina clients remotely.

Not tax, legal or investment advice. Figures are estimates for education. Checked November 2026.