US Rental Property Depreciation Calculator 2026
Calculate the declining value of your assets over time.
Estimate your investment property depreciation deductions for 2025. Shows MACRS building allowance (3.636%/year (residential)) and Section 179 personal property. See your tax saving at your marginal rate.
Estimates only. Get a cost segregation professional's depreciation schedule for IRS-compliant claims.
How investment property depreciation works in the United States
Two divisions of depreciation
MACRS (building allowance at 3.636%/year (residential)) and Section 179 (personal property at IRS effective life rates) reduce taxable income each year at no extra cash cost. On a new $600,000 property, Year 1 depreciation can exceed $15,000.
over 27.5 years (residential) or 39 years (commercial) for 40 years on construction cost
2.5% of construction cost
MACRS deducts 2.5% of the original building construction cost each year for 40 years. Only the building cost (not land) is eligible. Construction must have commenced for qualifying properties.
| Build cost | MACRS/year | Tax saving @ 37% |
|---|---|---|
| $200,000 | $5,000 | $1,850/year |
| $350,000 | $8,750 | $3,238/year |
| $500,000 | $12,500 | $4,625/year |
Depreciation on individual depreciating assets
Personal property — 5- and 7-year MACRS
Appliances, carpet, blinds, and furniture in a rental are depreciated over 5 or 7 years using MACRS declining-balance — far faster than the 27.5-year building. Section 179 and bonus depreciation can expense many qualifying items immediately. A cost-segregation study reclassifies building components into these shorter-life classes.
Declining-balance (MACRS) method
Front-loads deductions to the early years by applying a fixed percentage (200% or 150% declining balance) to the remaining book value, then switching to straight-line when that yields a larger deduction. It applies to personal property — the building itself is always straight-line.
Why a QS schedule is required for property depreciation
IRS requires a QS schedule
You cannot self-estimate construction costs or personal property values for tax purposes. A registered cost segregation professional prepares the schedule once, listing every qualifying item, its effective life, and annual deduction amount.
Cost and payback
A QS schedule costs $500–$800 (fully tax-deductible). On a new $600,000 property with $15,000+ Year 1 depreciation, the schedule cost pays for itself 20× over in year one.
Frequently asked Frequently asked questions
How much depreciation can I claim on an investment property?
Year 1 depreciation typically ranges from $5,000–$20,000+ depending on value, age, and construction cost. New $600,000 property: $9,750/year (MACRS) + $7,200 (Section 179 Year 1) = $16,950 total Year 1 deduction.
Can I depreciate an older property?
MACRS requires construction for qualifying properties. Pre-1987 buildings are ineligible for MACRS (but post-1987 renovations can be depreciated). Section 179 can be claimed on new assets you install in any property.
Does depreciation reduce the CGT adjusted basis?
Yes. MACRS and Section 179 deductions claimed reduce the adjusted basis, increasing your capital gain on eventual sale. This is an important long-term consideration.
Do I need a QS schedule every year?
No. The QS prepares the schedule once, covering the full 40-year MACRS life and all Section 179 items. You use it for your annual tax return. Update required only if you make capital improvements.
Where these figures come from
Property and mortgage figures on this page are drawn from The Federal Reserve (rate data), the Consumer Financial Protection Bureau (mortgage rules), The IRS (property-related tax deductions), and HUD.
- US mortgage rates — Federal Reserve / FRED — 30-Year Fixed Mortgage Average.
- Mortgage & closing rules — CFPB — Owning a Home.
- Home mortgage interest deduction — IRS Topic 504 — Home Mortgage Points.
- Property tax deduction (SALT cap) — IRS Topic 503 — Deductible Taxes.
- Capital gains on home sale ($250k/$500k) — IRS Topic 701 — Sale of Your Home.
- FHA & federal housing programs — HUD — US Department of Housing and Urban Development.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
Select the question that matches where you are right now.
Your result reflects the financial position of the property scenario you entered — based on current rates, market rules, and standard calculation methods used across the Australian property industry.
Use this as a planning figure. Compare different property prices, deposit sizes, or loan terms to see how each changes the outcome. Adjust inputs in Standard or Advanced mode for more detail.
Not a bank approval, valuation, or guarantee. Lenders apply their own policies, credit checks, and property assessments beyond what any calculator can model.
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Property calculations are most sensitive to the interest rate, loan amount, and time horizon. Small changes to these inputs produce the largest shifts in your result.
A 0.5% rate change on a $500k loan shifts annual interest by ~$2,500. Use Standard mode to compare fixed vs variable rate scenarios.
Extending the loan term reduces repayments but increases total interest. Interest-only periods change cash flow but not total cost. Model both in Advanced mode.
The ratio of your loan to the property value affects LMI, rate pricing, and lender appetite. Crossing the 80% LVR threshold changes the cost structure significantly.
To improve your property outcome, focus on the inputs with the highest leverage — these typically produce more impact per dollar than broad changes.
A larger deposit reduces LVR, eliminates LMI at 80%, and may unlock better rate pricing. Even $10k–$20k extra deposit can shift the cost picture.
Credit card limits and personal loans reduce borrowing capacity dollar-for-dollar. Closing unused cards before applying is one of the fastest levers.
Rate, policy, and LVR treatment vary between lenders. A mortgage broker can identify the best fit for your specific profile and property type.
Property decisions involve multiple linked calculations. Use the related calculators to model the full picture before committing.
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