CalculateRealEstateROI

Tax Concepts

Depreciation

Annual non-cash deduction reflecting wear and tear on property improvements.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Plain-English explanation

Residential: 27.5 years straight-line. Reduces taxable income without reducing cash flow.

Examples

  • $275k building basis ÷ 27.5 = $10k annual depreciation.

Common mistakes

  • Forgetting to depreciate.
  • Including land in depreciable basis.

Related questions