Calculating Depreciation on your Rental Property
The IRS and Turbo Tax also offer information on depreciating your rental property. This is required for US properties.
Figure out the depreciation on your rental property by:
- Determining your cost or other tax basis for the property. This is generally what you paid for the property (cost plus expenses).
- Allocating that cost to the different types of property included in your rental. Land is not depreciated. Buildings are.
- Calculating depreciation for each property type based on the methods, rates and useful lives specified by the IRS.
The Turbo Tax article lists the most common divisions of tax basis for a rental property, followed by explanations of the different methods of depreciation that generally apply:
| Type of Property | Method of Depreciation | Useful Life in Years |
| Land | Not allowed | N/A |
| Residential rental real estate (buildings or structures and structural components) | Straight line | 27.5 |
| Nonresidential rental real estate | Straight line | 39 |
| Shrubbery, fences, etc. | 150% declining balance | 15 |
| Furniture or appliances | 200% declining balance | 5 |
Tables for all types of properties can be found in IRS Publication 946: How to Depreciate Property. For general information on depreciation of rentals, see IRS Publication 527: Residential Rental Property. See also Form 4562.