Use the property’s depreciable basis, not the land value
Separate the purchase price into land and building values
Add closing costs and capital improvements to the building basis if applicable
Use the residential rental property recovery period of 27.5 years
Use the straight-line method for residential rental property
Start depreciation when the property is placed in service, not when purchased
Prorate depreciation for the first and last year based on the number of months in service
Use IRS Publication 946 and Form 4562 to calculate and report depreciation
Depreciate only the structure and qualifying improvements, not the land
Include major improvements, renovations, and certain appliance replacements as separate depreciable assets
Keep records of purchase documents, land allocation, improvements, and dates placed in service
Claim depreciation annually on your tax return
Reduce the property’s adjusted basis by the depreciation claimed each year
Use a tax professional if the property has mixed personal and rental use or complex improvements