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Real Estate Investor Tax Tool

Estimate your rental property depreciation savings · Bilingual EN/ES

Rental Property Depreciation & Tax Savings Calculator

Elite Tax Consulting · Las Vegas · Strategy for real estate investors

1

27.5 or 39 Years

Residential rentals depreciate over 27.5 years; commercial over 39

2

Land Never Depreciates

Only the building value can be depreciated, not the land

3

Paper Losses, Real Savings

Depreciation can create a tax loss even on a cash-flowing property

Property details

Your tax situation

Depreciable basis (building value only)$280,000
Annual depreciation (straight-line)$10,182
Annual tax savings from depreciation$2,444
Taxable rental income after depreciation$4,818
This is a paper-loss/income note that updates automatically.
$2,444/year
estimated annual tax savings from depreciation · Nevada has no state income tax, so this is federal-only savings

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Accelerating Depreciation

Bonus depreciation and cost segregation studies can sometimes let you accelerate a large portion of this depreciation into year one instead of spreading it evenly over 27.5 or 39 years. The exact percentage available depends on current tax law and when the property was placed in service, so this is worth a direct conversation with us before you rely on it.

1031 Like-Kind Exchange

A 1031 exchange lets you defer capital gains tax by rolling the sale proceeds from an investment property into a new "like-kind" investment property instead of cashing out. The rules are strict and unforgiving: you generally have 45 days after closing the sale to identify replacement properties, and 180 days to close on the purchase, all handled through a qualified intermediary. Missing either deadline can disqualify the exchange entirely.

The Short-Term Rental (STR) Loophole

If you materially participate in a short-term rental where the average guest stay is about seven days or less, the resulting losses may be usable to offset your active W-2 or business income, not just other passive income. This is fact-specific and requires meeting real hours-and-involvement tests and keeping careful documentation. It is not automatic, and we'd want to walk through your exact situation before you count on it.

Cost Segregation Studies

A cost segregation study is an engineering-based analysis that breaks a building down into its components, such as flooring, fixtures, cabinetry, and certain site improvements, and reclassifies pieces of it into much shorter depreciation lives (often 5, 7, or 15 years) instead of lumping the entire building into 27.5 or 39 years. This can front-load a meaningful amount of your depreciation deduction. It's typically performed by a specialist firm, and whether it makes financial sense depends on the size and type of the property.

Depreciation basics

Residential rental building27.5-year straight-line
Commercial building39-year straight-line
Land valueNever depreciable
Depreciation recapture at saleTaxed, generally up to a 25% federal rate
Nevada state income tax$0, figures above are federal only

A few things to keep in mind

  • Depreciation is a deduction against your rental income each year you own the property; it is not a permanent tax-free gift. When you eventually sell, the IRS generally "recaptures" the depreciation you claimed, taxing it at its own rate rather than at capital gains rates.
  • Only the portion of your purchase price allocated to the building is depreciable. Land allocation is typically based on the assessor's tax bill or a formal appraisal, not just a guess; this matters because a higher land allocation means a smaller depreciation deduction.
  • Whether a rental loss can offset your other income (W-2 wages, business profit, etc.) depends heavily on passive-activity-loss rules, your participation level, and in some cases the real-estate-professional or short-term-rental tests; it is genuinely one of the most misunderstood areas of real estate tax.
  • Nevada advantage: Nevada has no state income tax, so every dollar of federal tax savings shown in this tool is savings you actually keep; there's no state-level clawback to plan around.