Real estate tax guide

Rental depreciation and cost segregation calculator

Enter the purchase details to see your yearly depreciation on a residential rental, and how a cost segregation study could change the first year. It is an estimate: we confirm the numbers before you file.

General information for 2026. Written by Prem Tax and Accounting Corp, a CPA firm. Real estate tax results depend on your facts, your income and your state, and this is not legal, tax or investment advice for your situation. Official sources are linked on each page. Talk to us before you buy, sell, restructure or take a large deduction.

Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 9, 2026.

Estimate your rental depreciation

Purchase price ($)

Closing costs added to basis ($)

Share of the price that is land (%)

Month it was ready to rent

Cost segregation: share reclassified

Your federal tax bracket

How the estimate works

Building cost: purchase price plus closing costs that belong in basis, minus the land share.
Regular depreciation: building cost divided by 27.5, with half a month in the month you start (mid-month convention).
Cost segregation scenario: the share you choose is moved to 5-, 7- and 15-year property and deducted in year one with 100% bonus depreciation. The rest is depreciated over 27.5 years.
Tax effect: the deduction times your bracket. It assumes you can use the loss.

The total over the life of the property is the same with or without a study. Cost segregation moves deductions earlier, and the accelerated parts are recaptured as ordinary income if you sell. See selling and 1031 exchanges.

Want a real analysis of a property you own or plan to buy? Book a 20-minute call.

Common questions

How is the first year calculated?

The IRS mid-month convention gives half a month of depreciation for the month the property is placed in service, plus full months after. A property placed in service in June gets 6.5 of 12 months in year one.

Where does the cost segregation percentage come from?

From a cost segregation study. Typical studies reclassify a modest share of a building, and the share depends on the property. The calculator lets you try 15% to 30% as examples. Only a real study gives your number.

Does the calculator include passive loss limits?

No. Whether you can use the deduction against other income depends on the passive rules, your income and the business loss limit. See our passive losses page.

What does it leave out?

Commercial property (39 years), state rules, depreciation recapture when you sell, partial-year ownership changes and improvements added later. It is for residential rentals acquired after January 19, 2025.

Official sources

Want help with your properties? We prepare rental returns, estimate depreciation and cost segregation, track passive losses, and plan sales and 1031 exchanges before you sign. Book a 20-minute call or send us a message.

Let's talk about your taxes, your business, your plans.

Tell us what you need and we will get back to you quickly. There is no pressure: just a friendly conversation and a clear next step.

Book a 20-minute call Call us

Prem Tax and Accounting Corp
4260 Westbrook Dr, Suite 107
Aurora, IL 60504

Monday to Friday, 9:00 am to 5:00 pm, by appointment. Saturday and Sunday by appointment when needed.