How to Calculate Depreciation Schedule
What is Depreciation Schedule?
Creates tax depreciation schedule itemizing building and improvement depreciation for tax deductions.
Step-by-Step Guide
- 1Building depreciates 27.5 years (residential) or 39 years (commercial)
- 2Land value NOT depreciated
- 3Improvements (roof, HVAC) depreciate per component lives
- 4Bonus depreciation: accelerate in year 1
- 5Work with accountant for accurate breakdown
Worked Examples
Input
Building $200k, 27.5 yrs
Result
$7.27k/yr
Common Mistakes to Avoid
- ✕Depreciating land (illegal, never depreciable)
- ✕Missing component depreciation
- ✕Not accounting for depreciation recapture on sale
Frequently Asked Questions
What's cost segregation?
Breaking down building into components; allows faster depreciation on shorter-life items.
How much tax savings?
Depreciation deduction × marginal tax rate; $100k depreciation × 37% = $37k tax savings.
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