Real Estate Depreciation Calculator
This calculator helps estimate annual depreciation for real estate using multiple commonly used approaches: straight-line (MACRS), componentized cost segregation, and application of bonus depreciation and Section 179 elections. It is designed for quick modeling and planning, not for filing tax returns.
Results are estimates based on user-provided allocations and statutory recovery periods. The tool intentionally simplifies certain U.S. tax conventions (for example, mid-month and mid-quarter conventions, placed-in-service prorations, and taxable-income limits for Section 179) to keep outputs transparent and easy to interpret.
Governance
Record 2fff222396f4 • Reviewed by Fidamen Standards Committee
Estimates annual straight-line depreciation under common U.S. tax recovery periods (residential rental 27.5 years, nonresidential real property 39 years). Uses a simple annualized approach; mid-month, mid-quarter, and placed-in-service prorations are noted but not fully modeled here.
Inputs
Results
Depreciable basis
$400,000.00
Recovery period (years)
39
Annual depreciation (straight-line)
$10,256.41
| Output | Value | Unit |
|---|---|---|
| Depreciable basis | $400,000.00 | USD |
| Recovery period (years) | 39 | years |
| Annual depreciation (straight-line) | $10,256.41 | USD |
Visualization
Methodology
All methods begin with a depreciable basis equal to the purchase price minus land value plus capital improvements. This is the starting point used for allocation and recovery calculations.
Straight-line method divides the depreciable basis by the statutory recovery period (27.5 years for residential rental property, 39 years for nonresidential real property) to produce a simple annual depreciation estimate.
Cost segregation allocates percentages of the depreciable basis to shorter property class lives (5‑yr, 7‑yr, 15‑yr). Each allocated portion is depreciated straight-line over its class life; the remaining balance is depreciated over the building life.
Bonus depreciation and Section 179 are treated as immediate deductions in the year placed in service. This calculator applies a user-specified bonus percentage and a Section 179 election amount capped at the user-provided statutory limit. It does not apply taxable-income-based limitations or carryforwards.
Key takeaways
Use straight-line for a quick baseline estimate. Use the cost segregation mode to model accelerated depreciation from reclassifying components into shorter lives. Use the bonus/Section 179 mode to see the immediate tax-deduction impact, then compare remaining annual depreciation.
Always consult tax counsel or a licensed CPA before filing: laws change, and elections such as Section 179 and bonus depreciation have eligibility rules, phaseouts, and interactions with taxable income.
Worked examples
Example 1: Residential rental purchased for $500,000 with $100,000 land allocation and no improvements. Straight-line annual depreciation = (500000 - 100000) / 27.5 = $14,545.45.
Example 2: Same property with 10% allocated to 5‑yr and 5% to 15‑yr (cost segregation). Componentized annual depreciation = (depreciable_basis * 0.10)/5 + (depreciable_basis * 0.05)/15 + (remaining_basis)/27.5.
F.A.Q.
Does this tool replace tax advice or official IRS calculations?
No. This tool provides estimates for planning and comparison. It does not replace official IRS forms, binding tax advice, or professional cost segregation studies. Use the outputs for planning and consult a CPA for filing or when precision is required.
How does the tool treat land versus building costs?
You must provide the portion of the purchase price allocated to land. Land is not depreciable. The calculator subtracts land value from the total purchase price to determine the depreciable basis.
Are mid-month and mid-quarter conventions applied?
Not in full detail. This calculator provides annualized depreciation and notes prorations. For first-year prorations under MACRS conventions, use a tax preparer or specialized software to apply the exact conventions.
What should I enter for cost segregation allocations?
Enter the percentage of depreciable basis you want allocated to 5‑year and 15‑year property. Percentages should be realistic and based on engineering cost segregation studies when accuracy is required. The calculator will allocate the remainder to the building class life.
Sources & citations
- IRS Publication 946 — How to Depreciate Property — https://www.irs.gov/pub/irs-pdf/p946.pdf
- NIST — Frameworks and standards for software and data integrity (for reliability & testing guidance) — https://www.nist.gov
- ISO — Quality management and standardization principles (ISO 9001) — https://www.iso.org
- IEEE — Best practices for software engineering and validation — https://www.ieee.org
- OSHA — General guidance on organizational controls and recordkeeping — https://www.osha.gov
- HUD — FHA Single Family Housing Policy Handbook 4000.1 — https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1
- HUD — Property Valuation and Appraisals (HUD 4155.2) — https://www.hud.gov/sites/documents/4155-2_4.pdf
- Fannie Mae — Selling Guide — https://selling-guide.fanniemae.com/
Further resources
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
Record ID: 2fff222396f4What changed (latest)
v1.0.0 • 2025-11-30 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
What changed (latest)
v1.0.0 • 2025-11-30 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Engine
v1.0.0
Data
Baseline (no external datasets)
Content
v1.0.0
UI
v1.0.0
Governance
Last updated: Nov 30, 2025
Reviewed by: Fidamen Standards Committee (Review board)
Credentials: Internal QA
Risk level: low
Reviewer profile (entity)
Fidamen Standards Committee
Review board
Internal QA
Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person
Semantic versioning
- MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
- MINOR: New features or fields that do not change existing outputs for the same inputs.
- PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.
Review protocol
- Verify formulas and unit definitions against primary standards or datasets.
- Run golden-case regression suite and edge-case suite.
- Record reviewer sign-off with credentials and scope.
- Document assumptions, limitations, and jurisdiction applicability.
Assumptions & limitations
- Uses exact unit definitions from the Fidamen conversion library.
- Internal calculations use double precision; display rounding follows the unit's configured decimal places.
- Not a substitute for calibrated instruments in regulated contexts.
- Jurisdiction-specific rules may require official guidance.
Change log
v1.0.0 • 2025-11-30 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: 91af998e72c6