Rental Property Depreciation Calculator

Rental property depreciation deducts building cost (excluding land) over useful life - 27.5 years for residential, 50 years for commercial. Reduces taxable rental income substantially. 200k building × 1/27.5 = 7,273 annual deduction. At 30% tax rate: 2,182 annual tax saving. Significant financial benefit often overlooked.

300k property × 80% building / 20% land = 240k building. 240k ÷ 27.5 = 8,727 annual depreciation. 30% marginal tax rate = 2,618 annual tax saving. Over 27.5 years: 72,000 cumulative tax savings (assuming consistent rate). Major hidden return on rental property investment.

Depreciation rules different from. Doesn't allow building depreciation against rental income (capital allowances only on fixtures, fittings, white goods - typically 2-5k/year). 'real estate professional' status more flexible. Consult local accountant - rules vary significantly by jurisdiction. This calculator uses-style straight-line depreciation as illustrative model.

A worked example

Try the defaults: property price of 300,000, land value of 20%, depreciation period of 27.5 years. The tool returns 8,727.27. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Property Price, Land Value %, and Depreciation Period (years). Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

The formula behind this

Building value = price × (1 - land %). Annual depreciation = building ÷ useful life years. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Where this fits in planning

This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.