Depreciation Calculator

Key Takeaways

• Depreciation Calculator estimates recovery period of 27.5 years and year-1 bonus depreciation of $120,000 for this scenario.
• Residential rental buildings depreciate over 27.5 years, but not all of a property is a "building." A cost-segregation study reclassifies the pieces that wear out faster — personal property into 5-year buckets, land improvements into 15-year buckets — and those reclassified buckets are the ones bonus depreciation can touch. On $400,000, the standard 20/10 split puts $80,000 into 5-year property and $40,000 into 15-year property, with $280,000 staying in the 27.5-year building.
• $130,182: $120,000 of bonus on the reclassified 5-year and 15-year buckets plus $10,182 on the building — worth $31,244 at a 24% marginal rate. That matches the cost segregation calculator hub's planning estimate for the same basis.

Calculation Output

Result Chart

Key Facts

How This Estimate Works

• Residential rental buildings depreciate over 27.5 years, but not all of a property is a "building." A cost-segregation study reclassifies the pieces that wear out faster — personal property into 5-year buckets, land improvements into 15-year buckets — and those reclassified buckets are the ones bonus depreciation can touch. On $400,000, the standard 20/10 split puts $80,000 into 5-year property and $40,000 into 15-year property, with $280,000 staying in the 27.5-year building.
• The One, Big, Beautiful Bill (signed July 4, 2025) permanently restored 100% bonus depreciation for property acquired after January 19, 2025 — so the full $120,000 of reclassified basis is deductible in Year 1: $120,000 of bonus alone. The building portion contributes $10,182 in Year 1 (a full first year here), for a total Year-1 deduction of $130,182 — versus just $14,545 on a plain straight-line schedule. The extra $115,636 of Year-1 deduction is worth $27,753 at a 24% marginal rate.
• The acquisition-date rule is the part that trips people up. The controlling test is when the property was acquired — written-binding-contract rules — not merely when it was placed in service. Property contracted before January 20, 2025 follows the old phase-down instead: 40% bonus in 2025, 20% in 2026, zero after. If your contract predates that line, rerun this page's math with the bonus toggle at 40 or 20 and the Year-1 number drops accordingly. You can also elect 40% in lieu of 100% for the first tax year ending after January 19, 2025 — a niche choice, but it exists.
• Why investors front-load on purpose: a dollar of deduction today is worth more than a dollar of deduction in year 20, and the front-loaded $120,000 is what makes a cost-segregation study pay for itself in the first tax return. The tradeoff arrives at sale — every dollar of depreciation you claim is recaptured at 25% when the property sells, which is exactly the math the 1031 exchange calculator hub models: investors who used this strategy often pair it with an exchange to defer the recapture bill this strategy creates. If you want the reclassification detail behind these buckets, the cost segregation calculator hub is the planning-estimate tool for it.
• Note the schedule after Year 1: with the reclassified buckets fully expensed, only the building portion keeps depreciating — $10,182 per year from Year 2 onward. Five years of deductions total $170,909. Compare that against the plain schedule on the straight-line page for this same $400K basis to see the shape of the tradeoff: enormous up front, thinner later.
• This is a planning estimate, not an engineered cost-segregation study and not tax advice. Bonus depreciation eligibility turns on the acquisition date — the property must have been acquired after January 19, 2025 for the restored 100% bonus — and state treatment of federal expensing often differs. A filing-grade answer needs a CPA who knows your return.

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