Equity & Wealth
Monthly Depreciation
Two-Input Ratio Tax Benefits Tax & Depreciation

Annual Depreciation

Annual straight-line depreciation deduction for the building.

Example Result

Sample Data
$11,200

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

See Your Own Properties

With the Rental Property Calculator™, you can run this calculation against your own rental properties using your real numbers.

View Pricing Sign In

Annual Depreciation Formula

(Purchase Price x (1 - Land Value %)) / 27.5
($385,000 x (1 - 20.00%)) / 27.5
$11,200

What This Means

A sample property priced at $385,000 with $2,850/month rent has a annual depreciation of $11,200. Depreciation is the #1 tax advantage of real estate. It is a "phantom expense" — you deduct it from income without actually spending any money. This can shelter rental income from taxes or even create paper losses.

Where This Value Comes From

Annual Depreciation is not entered directly — it is calculated from Purchase Price and Land Value Percent. See the formula breakdown above and the detailed inputs below.

Calculated From

Annual Depreciation is calculated using these inputs:

Purchase Price
The agreed-upon price to acquire the property.
Found on your purchase contract / hud-1
$385,000
Land Value Percent
The percentage of property value attributed to the land (non-depreciable).
Found on your county assessor
20.00%

Used to Calculate

Annual Depreciation is used as an input for these calculations:

Gross Depreciation Return on Equity
Return Metrics
14.55%
Monthly Depreciation
Tax Benefits
$933.33
Depreciation as Percent of Income
Tax Benefits
34.47%
Tax Savings From Depreciation
Tax Benefits
$2,688
Cash Flow from Depreciation™
Tax Benefits
$2,688
Effective Tax Rate
Tax Benefits
0.00%
Accumulated Depreciation Year 5
Tax Benefits
$56,000

Platform Distribution

Unlock Platform Benchmarks

See the average, median, and where your property ranks among 105 properties on the platform.

Unlock Rental Property Calculator

Why It Matters

Depreciation is the #1 tax advantage of real estate. It is a "phantom expense" — you deduct it from income without actually spending any money. This can shelter rental income from taxes or even create paper losses.

Detailed Explanation

Annual depreciation is the IRS-allowed deduction for the building's wear and tear. Residential rental properties are depreciated over 27.5 years using straight-line method. Land is not depreciable.

Example

Sample Result
$11,200

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

Related Calculations

Monthly Depreciation

2

Monthly depreciation deduction.

$933.33 Example

Depreciation as Percent of Income

2

Annual depreciation as a percentage of effective gross income.

34.47% Example

Tax Savings From Depreciation

U

Dollar amount saved in taxes due to depreciation deduction.

$2,688 Example

Cash Flow from Depreciation™

U

Additional effective cash flow generated by depreciation tax savings.

$2,688 Example

Effective Tax Rate

W

Estimated income tax as a percentage of NOI.

0.00% Example

Depreciation Remaining

2

Years of depreciation benefit remaining.

27.5 years Example

Run This Calculation on Your Property

Get instant results for all 166 calculations by entering your property details into the Rental Property Calculator.

View Pricing