Estimate your depreciable basis, first-year deduction, and tax savings — including an optional cost segregation / bonus depreciation estimate.
| Year | Tax Year | Depreciable Basis | Annual Deduction | Cumulative Depreciation | Remaining Basis |
|---|---|---|---|---|---|
| 1 | 2026 | $400,000.00 | $4,242.42 | $4,242.42 | $395,757.58 |
| 2 | 2027 | $400,000.00 | $14,545.45 | $18,787.88 | $381,212.12 |
| 3 | 2028 | $400,000.00 | $14,545.45 | $33,333.33 | $366,666.67 |
| 4 | 2029 | $400,000.00 | $14,545.45 | $47,878.79 | $352,121.21 |
| 5 | 2030 | $400,000.00 | $14,545.45 | $62,424.24 | $337,575.76 |
| 6 | 2031 | $400,000.00 | $14,545.45 | $76,969.70 | $323,030.30 |
| 7 | 2032 | $400,000.00 | $14,545.45 | $91,515.15 | $308,484.85 |
| 8 | 2033 | $400,000.00 | $14,545.45 | $106,060.61 | $293,939.39 |
| 9 | 2034 | $400,000.00 | $14,545.45 | $120,606.06 | $279,393.94 |
| 10 | 2035 | $400,000.00 | $14,545.45 | $135,151.52 | $264,848.48 |
| 11 | 2036 | $400,000.00 | $14,545.45 | $149,696.97 | $250,303.03 |
| 12 | 2037 | $400,000.00 | $14,545.45 | $164,242.42 | $235,757.58 |
| 13 | 2038 | $400,000.00 | $14,545.45 | $178,787.88 | $221,212.12 |
| 14 | 2039 | $400,000.00 | $14,545.45 | $193,333.33 | $206,666.67 |
| 15 | 2040 | $400,000.00 | $14,545.45 | $207,878.79 | $192,121.21 |
| 16 | 2041 | $400,000.00 | $14,545.45 | $222,424.24 | $177,575.76 |
| 17 | 2042 | $400,000.00 | $14,545.45 | $236,969.70 | $163,030.30 |
| 18 | 2043 | $400,000.00 | $14,545.45 | $251,515.15 | $148,484.85 |
| 19 | 2044 | $400,000.00 | $14,545.45 | $266,060.61 | $133,939.39 |
| 20 | 2045 | $400,000.00 | $14,545.45 | $280,606.06 | $119,393.94 |
| 21 | 2046 | $400,000.00 | $14,545.45 | $295,151.52 | $104,848.48 |
| 22 | 2047 | $400,000.00 | $14,545.45 | $309,696.97 | $90,303.03 |
| 23 | 2048 | $400,000.00 | $14,545.45 | $324,242.42 | $75,757.58 |
| 24 | 2049 | $400,000.00 | $14,545.45 | $338,787.88 | $61,212.12 |
| 25 | 2050 | $400,000.00 | $14,545.45 | $353,333.33 | $46,666.67 |
| 26 | 2051 | $400,000.00 | $14,545.45 | $367,878.79 | $32,121.21 |
| 27 | 2052 | $400,000.00 | $14,545.45 | $382,424.24 | $17,575.76 |
| 28 | 2053 | $400,000.00 | $14,545.45 | $396,969.70 | $3,030.30 |
| 29 | 2054 | $400,000.00 | $3,030.30 | $400,000.00 | $0.00 |
This calculator provides estimates for planning purposes only and is not tax, legal, or accounting advice. Cost segregation results vary by property and require an engineering-based study for filing purposes. Consult your CPA before making tax decisions.
PropCFO automatically tracks the rest of your Schedule E — repairs, utilities, insurance, and mortgage interest — so nothing else gets left on the table.
Start your free 14-day trial →Depreciation is calculated by taking your property's total depreciable basis (Purchase Price + Capital Improvements - Land Value) and dividing it across its IRS-mandated recovery period using the Straight-Line method. For residential property, that basis is divided over 27.5 years, taking into account the month the property was placed in service. The annual deduction is reported on Schedule E alongside your other rental expenses, which PropCFO organizes with a one-click Schedule E export — start a free 14-day PropCFO trial to try it.
The IRS established the 27.5-year recovery period under the Modified Accelerated Cost Recovery System (MACRS) for residential rental properties in the Tax Reform Act of 1986. Commercial real estate, by contrast, uses a 39-year recovery period.
No. Land is considered indestructible and does not wear out over time, so the IRS does not allow land depreciation. You must split your purchase price between land value and building value (typically 15%–30% land split based on tax assessments or property appraisals). Only the building value and capital improvements can be depreciated.
The IRS requires real property to use the "Mid-Month Convention." Under this rule, regardless of what day of the month you place a property in service, you only receive half a month's depreciation for that initial month. Full annual deductions begin in Year 2.
A cost segregation study breaks down a building into its individual components (e.g., flooring, appliances, landscaping, specialty lighting) and reclassifies eligible elements into shorter 5-year or 15-year recovery periods. Bonus depreciation allows real estate investors to deduct a significant percentage of those accelerated asset classes in the very first year. Tracking those asset classes year after year is where generic tools fall short — see how PropCFO compares to spreadsheets and QuickBooks for rental property bookkeeping.
This tool provides preliminary estimates for strategic financial planning and acquisition underwriting. Formal tax filings require precise asset logging and, where applicable, engineering-based cost segregation studies. Please review the planning disclaimer above and consult your CPA before filing. When you're ready to keep tax-ready books year-round, Schedule E export is included on every plan — compare PropCFO pricing plans.