Home Accumulated Depreciation Calculator

Home Depreciation Equation:

\[ \text{Home Acc Dep} = \frac{(\text{Home Value} - \text{Land})}{27.5} \times \text{Years} \]

Home Accumulated Depreciation (USD):

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1. What is Home Accumulated Depreciation?

Home Accumulated Depreciation refers to the total depreciation claimed on a residential rental property over time. For US tax purposes, residential real estate is depreciated over 27.5 years using the straight-line method.

2. How Does the Calculator Work?

The calculator uses the standard depreciation equation:

\[ \text{Home Acc Dep} = \frac{(\text{Home Value} - \text{Land})}{27.5} \times \text{Years} \]

Where:

\( \text{Home Value} \) — Total value of the property (USD)
\( \text{Land} \) — Value of the land (non-depreciable portion) (USD)
\( 27.5 \) — Depreciation period in years for US residential property
\( \text{Years} \) — Number of years the property has been depreciated

Explanation: The equation calculates the straight-line depreciation by first determining the depreciable basis (home value minus land) and then applying the annual depreciation rate over the specified number of years.

3. Importance of Home Depreciation

Details: Depreciation is a valuable tax deduction for rental property owners, allowing them to recover the cost of income-producing property over time. Proper calculation is essential for accurate tax reporting and maximizing deductions.

4. Using the Calculator

Tips: Enter the total home value in USD, land value in USD, and number of years the property has been depreciated. All values must be positive numbers, and years cannot exceed 27.5 (the full depreciation period).

5. Frequently Asked Questions (FAQ)

Q1: Why is land value subtracted?
A: Land is not depreciable under tax law, so only the building value (home value minus land) can be depreciated.

Q2: What is the 27.5 year period?
A: This is the IRS-mandated depreciation period for residential rental properties in the US (27.5 years for residential, 39 years for commercial).

Q3: Can I depreciate my primary residence?
A: No, depreciation only applies to income-producing properties, not primary residences.

Q4: What if I've owned the property for more than 27.5 years?
A: Once the full depreciation period has passed, no further depreciation can be claimed on the original basis.

Q5: How does this affect capital gains when I sell?
A: Accumulated depreciation is subject to "depreciation recapture" tax when you sell the property, taxed at a maximum 25% rate.