आर्थिक

स्थावर मालमत्ता घसारा

Straight-Line Depreciation

Asset Cost

Salvage Value

उपयुक्त आयुष्य

वर्षे

What is Real Estate Depreciation?

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Real estate depreciation allows investors to deduct the cost of a rental property over its useful life (27.5 years for residential, 39 years for commercial in the US), reducing taxable rental income even if the property is appreciating in value.

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How to Real Estate Depreciation

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1Annual depreciation = (Purchase price − land value) / 27.5 years
2Land cannot be depreciated — only the building (typically 70–80% of purchase price)
3Depreciation is a "paper" deduction — it reduces taxable income without a cash outflow
4When you sell, depreciation is "recaptured" and taxed at up to 25%

Worked Examples

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Example 1

Given:$400,000 rental, $80,000 land value, 27.5 years

परिणाम:$11,636/year depreciation deduction

($400k−$80k)/27.5

Example 2

Given:$1,200 monthly rent, $11,636 depreciation, 25% tax bracket

परिणाम:Save $2,909 in taxes/year

Effective after-tax rent income boosted significantly

Depreciation Recapture Overview

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Event	Tax Treatment	Rate (2024)
Annual depreciation deduction	Reduces ordinary income	Up to 37%
Property sale — depreciation recapture	Taxed as ordinary income	Up to 25%
Property sale — capital gain beyond	Long-term capital gains	0%, 15%, or 20%
1031 exchange	Defer all taxes	Must reinvest in like-kind property

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Pro Tip

Keep meticulous records of capital improvements (new roof, HVAC, etc.) — they can be depreciated separately or expensed immediately under Section 179 or bonus depreciation, providing larger upfront deductions.

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Did you know?

Real estate depreciation is one of the few tax benefits available to high earners. Under certain conditions, "real estate professional" status allows unlimited depreciation deductions against any income — a strategy used extensively by wealthy investors.

References

›MACRS depreciation — Wikipedia

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Reviewed October 2026

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