Cernarus

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.

Updated Nov 30, 2025

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

Updates as you type

Depreciable basis

$400,000.00

Recovery period (years)

39

Annual depreciation (straight-line)

$10,256.41

OutputValueUnit
Depreciable basis$400,000.00USD
Recovery period (years)39years
Annual depreciation (straight-line)$10,256.41USD
Primary result$400,000.00

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.

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.

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.

Further resources

Expert Q&A

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