CalcStack — free, instant, no signup. The interactive calculator loads automatically.
The IRS pays you for a building that is usually gaining value.
Depreciation is the strangest gift in the tax code: a deduction for wear on an asset that typically appreciates. Residential rentals depreciate over 27.5 years on the building value only — and the bill comes due at sale through recapture. This calculator shows both sides so the "paper loss" is never a surprise later.
Landlords use it at tax time to see the deduction that shelters their cash flow — and before selling, to price the recapture bill nobody warned them about. CPAs use it to show clients why "the rental loses money on paper" is a feature.
(Purchase price + closing costs − land value) ÷ 27.5, straight-line, starting the month the property is placed in service (mid-month convention: half a month for the first and last month). Residential rental is 27.5 years; commercial is 39. Appliances and improvements depreciate separately on faster schedules.
When you sell, all depreciation you claimed (or could have claimed) is taxed as unrecaptured §1250 gain at up to 25% — even if you never took the deduction. It is deferral, not forgiveness. Strategies that legally avoid it: hold until death (stepped-up basis) or a 1031 exchange into the next property.
For properties roughly $300k+, cost segregation reclassifies 20–30% of the building into 5/7/15-year property for front-loaded deductions — worth it for high-bracket owners, especially with bonus depreciation. The study runs $1,500–$5,000, so the property value and your bracket decide.