Calculate your property's depreciation schedule, track your adjusted basis, and project tax benefits over the ownership period
Date property was placed in service
Title fees, legal fees, recording fees (not loan costs)
Residential rental (27.5 year recovery period) or Commercial/Non-residential (39 year recovery period)
Typically 5-30 years. Adjust this to match your investment timeline.
Mid-month convention is standard for real estate. Assumes property placed in service at mid-month.
Projecting 30 years of depreciation and tax benefits
Accounting for the time value of money at a 3.0% discount rate
This represents the current value of all future tax savings from depreciation deductions.
When you sell, you'll owe depreciation recapture tax on the depreciation you claimed. Use our Depreciation Recapture Calculator to estimate that tax liability, or consider a 1031 exchange to defer it.
Calculate Depreciation Recapture TaxTotal depreciation claimed through each year
Breakdown of depreciation sources each year
Your property's tax basis decreases as you claim depreciation
Total tax savings from depreciation deductions over time
Showing 10 of 30 years
| Year | Total Depreciation | Accumulated | Adjusted Basis | Tax Savings | |
|---|---|---|---|---|---|
Year 1 FY 2026 | $13,939 | $13,939 | $486,061 | $4,182 | |
Year 2 FY 2027 | $14,545 | $28,485 | $471,515 | $4,364 | |
Year 3 FY 2028 | $14,545 | $43,030 | $456,970 | $4,364 | |
Year 4 FY 2029 | $14,545 | $57,576 | $442,424 | $4,364 | |
Year 5 FY 2030 | $14,545 | $72,121 | $427,879 | $4,364 | |
Year 6 FY 2031 | $14,545 | $86,667 | $413,333 | $4,364 | |
Year 7 FY 2032 | $14,545 | $101,212 | $398,788 | $4,364 | |
Year 8 FY 2033 | $14,545 | $115,758 | $384,242 | $4,364 | |
Year 9 FY 2034 | $14,545 | $130,303 | $369,697 | $4,364 | |
Year 10 FY 2035 | $14,545 | $144,848 | $355,152 | $4,364 |
Your current tax basis in the property
Your adjusted basis is critical for 1031 exchanges. When you exchange properties, your basis carries forward to the replacement property. This affects your future depreciation deductions and capital gains calculation if you eventually sell.
Educational guide to property depreciation and tax benefits
Depreciation is a non-cash tax deduction that allows you to recover the cost of income-producing property over time. The IRS recognizes that buildings and improvements wear out, and allows you to deduct a portion of the property's value each year.
Each year, you can deduct a percentage of your property's depreciable basis (cost minus land value). For residential rental property, you divide the basis by 27.5 years. For commercial property, you divide by 39 years. This creates a tax deduction that reduces your taxable income.
Depreciation deductions reduce your taxable income, which saves taxes at your marginal rate. For example, if you're in the 30% tax bracket and depreciate $10,000, you save $3,000 in taxes. Over the property's life, this creates substantial tax savings.
Cost segregation is an engineering study that identifies property components with shorter depreciation lives (5, 7, 15 years) rather than treating everything as building (27.5 or 39 years). This accelerates deductions and increases early-year tax savings.
Section 179 is a first-year expensing election for qualifying property (up to $2,560,000 in 2026), typically used for personal property, not the building itself. Bonus depreciation provides an additional first-year deduction (60% in 2024). Both accelerate tax benefits but don't increase total depreciation.
Your adjusted basis (original basis + improvements - depreciation) is critical for 1031 exchanges. When you exchange, your basis carries forward to the replacement property. Understanding this helps you plan your exchange strategy and estimate future depreciation.
When you sell a property, you must "recapture" (pay tax on) the depreciation you claimed, at a 25% rate. However, a 1031 exchange allows you to defer both capital gains and depreciation recapture taxes by reinvesting in replacement property.
Understanding annual depreciation is key to tax planning. Explore these related tools:
Calculate the tax on depreciation when you sell your property
Calculate your adjusted cost basis after accounting for depreciation
See how a 1031 exchange defers both capital gains and depreciation recapture
Verify you've held the property long enough for investment intent
Get matched with qualified tax professionals and CPAs who specialize in real estate depreciation and 1031 exchanges