Advanced MACRS Depreciation Calculator
Maximize your real estate investment returns with precise depreciation calculations
How Rental Property Depreciation Works
Real estate depreciation is one of the most powerful tax benefits available to property investors. The IRS allows you to deduct a portion of your property's cost each year, recognizing that buildings wear out over time.
MACRS for Real Estate Investors
- •27.5-year depreciation schedule for residential rentals
- •39-year schedule for commercial properties
- •Only the building can be depreciated, not land
- •Improvements and rehab costs can often be depreciated faster
Maximize Your Tax Benefits
- •Consider bonus depreciation for qualifying improvements
- •Track all property-related expenses
- •Work with a qualified tax professional
- •Plan for depreciation recapture when selling
Frequently Asked Questions
Can I depreciate rehab costs on a rental property?
Yes, most rehab and improvement costs can be depreciated. Some improvements may qualify for bonus depreciation or Section 179 deductions, allowing for faster write-offs in the first year.
What happens to depreciation when I sell the property?
When you sell, you may need to "recapture" the depreciation you've claimed, paying tax on it at a maximum rate of 25%. However, strategies like 1031 exchanges can help defer this tax.
How does depreciation affect my financing options?
Depreciation reduces your taxable income, which can improve your debt-to-income ratios for future property acquisitions. This makes it easier to qualify for additional investment property loans.