Question 1

How long do you depreciate rental property?

Accepted Answer

Residential rental property is depreciated over 27.5 years using the straight-line method under MACRS. Commercial property (offices, retail, warehouses) is depreciated over 39 years. These recovery periods are set by the IRS and apply to the building structure only, not the land.

Question 2

Can you depreciate land?

Accepted Answer

No, land cannot be depreciated because it does not wear out or become obsolete. When you purchase a property, you must separate the land value from the building value. A common method is to use the local tax assessor's ratio of land to improvements, or get a professional appraisal.

Question 3

When does rental property depreciation start?

Accepted Answer

Depreciation starts when the property is placed in service, meaning it is ready and available for rent — not when you purchased it or when a tenant moves in. The IRS uses the mid-month convention, so you get half a month of depreciation for the month the property is placed in service.

Question 4

What happens to depreciation when you sell rental property?

Accepted Answer

When you sell, you must recapture the depreciation you claimed (or could have claimed) as ordinary income, taxed at a maximum rate of 25%. This is called depreciation recapture under Section 1250. You may be able to defer this tax through a 1031 like-kind exchange into another investment property.

Question 5

Can you depreciate a property you live in?

Accepted Answer

You cannot depreciate your primary residence. However, if you use part of your home exclusively for business (home office), you can depreciate that portion. If you convert your home to a rental property, you can begin depreciating it based on the lesser of its fair market value or adjusted basis at the time of conversion.

Question 6

What improvements can be depreciated on rental property?

Accepted Answer

Capital improvements that extend the property's life or add value can be depreciated. This includes new roofs, HVAC systems, appliances, and renovations. Improvements to residential rental property are depreciated over 27.5 years, while some qualified improvement property may qualify for shorter recovery periods or bonus depreciation.

Real Estate Depreciation

Property Details

Important Note

Deduction Schedule

Frequently Asked Questions

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Real Estate Depreciation

Property Details

Important Note

Deduction Schedule

Frequently Asked Questions

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Real Estate Depreciation

Property Details

Important Note

Deduction Schedule

Frequently Asked Questions

1How long do you depreciate rental property?

2Can you depreciate land?

3When does rental property depreciation start?

4What happens to depreciation when you sell rental property?

5Can you depreciate a property you live in?

6What improvements can be depreciated on rental property?

Related Calculators

Real Estate Depreciation

Property Details

Important Note

Deduction Schedule

Frequently Asked Questions

1How long do you depreciate rental property?

2Can you depreciate land?

3When does rental property depreciation start?

4What happens to depreciation when you sell rental property?

5Can you depreciate a property you live in?

6What improvements can be depreciated on rental property?

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