The direct answer
Rental-property depreciation generally starts with the depreciable basis of the building and eligible improvements, not the land. IRS Publication 527 explains that depreciation depends on basis, recovery period and method, and that residential rental property under the general MACRS system is generally depreciated straight-line over 27.5 years using the mid-month convention.
Separate land from depreciable improvements
Land is not depreciable. Allocate the property cost between land and building using supportable evidence, then adjust basis for acquisition items and later improvements as required by the tax rules.
To apply the approach to an editable scenario, use the Rental Property Calculator. For the neighboring question, explore Rental Property Cash Flow Calculator.
Determine the basis placed in service
For a purchased rental, the starting basis generally includes the cost allocated to the depreciable property plus qualifying acquisition costs. When converting a former personal residence to rental use, special basis rules can apply and should be checked against current IRS guidance.
Use the correct recovery period and convention
Publication 527 states that residential rental property under GDS generally uses a 27.5-year recovery period, straight-line depreciation and the mid-month convention. Separate personal-property components and improvements can have different recovery treatment.
Worked example
If a rental purchase has $360,000 of allocable total cost and supportable records allocate $90,000 to land, the starting building amount before other basis adjustments is $270,000. The annual depreciation calculation still depends on the placed-in-service date and applicable MACRS convention.
Common mistakes and limitations
Do not depreciate the land portion or simply divide the entire purchase price by 27.5 without determining the correct depreciable basis.
Scenario estimator based on user inputs. It is not an appraisal, lending decision, tax calculation or investment recommendation.
Frequently asked questions
Is land depreciable for a rental property?
No. Land is generally excluded from the depreciable basis.
Is residential rental property always exactly purchase price divided by 27.5?
No. Basis allocation, adjustments and the mid-month convention affect the deduction.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- IRS — Publication 527 (2025), Residential Rental PropertyRental income and expense concepts; operating/rental expense context.
- IRS — Publication 551 (12/2025), Basis of AssetsFair-market-value concept and use of similar-property sales as evidence.
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