Calculator
Depreciation & Adjusted Basis
Calculate your annual straight-line depreciation deduction, track accumulated depreciation, and estimate your adjusted basis. Understand the recapture tax exposure before you sell.
Property cost
Land is never depreciated. Typical range: 15–30% for urban sites.
Capital improvements added to your depreciable basis.
Asset class
Most commercial properties use 39-year straight-line depreciation.
Timing
Exit estimate (optional)
Annual depreciation deduction
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Depreciable basis
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Years held
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Accumulated depreciation
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Adjusted basis today
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Years remaining
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% basis remaining
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Estimated tax exposure at sale
Realized gain
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§1250 depreciation recapture
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Remaining capital gain
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Recapture tax (25% rate)
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Capital gain tax (20% LT)
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Est. total federal tax
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Recapture and capital gain rates are simplified federal estimates. State taxes, NIIT (3.8%), and installment sale elections can significantly change outcomes. Consult your tax advisor.
10-year depreciation schedule
| Year | Annual depr. | Accum. depr. | Adjusted basis |
|---|
Frequently Asked Questions
How many years do you depreciate commercial real estate?
Commercial real property (non-residential) is depreciated over 39 years using the straight-line method under MACRS. Residential rental property depreciates over 27.5 years. Land improvements (parking lots, landscaping, fencing) use a 15-year schedule. Personal property and FF&E typically depreciate over 5 or 7 years. Land itself is never depreciable.
What is adjusted basis in real estate?
Adjusted basis is your original cost basis (purchase price + acquisition costs) increased by capital improvements and reduced by accumulated depreciation. At sale, your taxable gain is calculated as: Sale Price − Adjusted Basis − Selling Costs. A property with a low adjusted basis due to years of depreciation may have a larger taxable gain than expected.
What is depreciation recapture and how is it taxed?
When you sell a depreciated property, the IRS 'recaptures' the depreciation deductions you previously took. For real property (§1250 gain), recapture is taxed at a maximum federal rate of 25% — higher than the 20% long-term capital gains rate. This is why 1031 exchanges are so valuable: they defer both capital gain AND depreciation recapture.
How does depreciation affect a 1031 exchange in Washington State?
In a fully deferred 1031 exchange, all accumulated depreciation on the relinquished property carries forward as a reduction in the replacement property's basis. This means future depreciation on the replacement property starts from a lower basis. While you defer the recapture tax, you also inherit the lower basis and reduced future deductions.
Estimates only. Depreciation calculations depend on cost segregation, asset classification, and mid-month convention adjustments not modeled here. This does not constitute tax advice. Consult a CPA or tax attorney.