Quick answer: A rental building, improvements and tangible assets such as appliances, carpet and furniture can generally be depreciated when owned, used to produce income, expected to last more than one year and placed in service. Land is not depreciable. Repairs may be currently deductible instead of capitalized.
This guide translates the controlling rule into filing and recordkeeping steps. It reflects official material available on August 17, 2026. Tax-year forms, software features, state rules and agency procedures can change, so use the instructions for the exact year and transaction involved.
At a glance
| Question | Practical answer |
|---|---|
| Who this applies to | Owners of residential property held out and ready for rent |
| What this does not cover | Personal-use portions, land, inventory, or property placed and removed from service in the same year |
| Where it is handled | Schedule E and generally Form 4562, with separate asset and basis schedules |
How the rule works
Start by identifying the legal character of the payment, account, credit, deduction, benefit or loan. A marketing label does not control the tax result. Dates, ownership, business purpose, filing status, income limits, residency and documentation can turn a superficially similar situation into a different answer.
- Residential rental buildings are generally recovered over 27.5 years under the general depreciation system.
- Land cost must be separated because land does not wear out and is not depreciated.
- Appliances, carpeting and residential rental furniture are generally five-year property under GDS.
- An addition or betterment is capitalized and depreciated; routine maintenance that keeps property in ordinary condition may be a current expense.
- Depreciation begins when the asset is ready and available for its intended rental use, not necessarily when the first tenant moves in.
Practical example
A landlord buys a property for $320,000 and reasonably allocates $80,000 to land. The $240,000 building basis enters residential rental depreciation when ready for rent. A $1,200 refrigerator installed later is tracked as a separate five-year asset rather than added to land or deducted as mortgage principal.
This example isolates the principal rule. It is not a complete return calculation: phaseouts, other credits, state conformity, related-party rules, passive-loss limits and prior-year carryovers may change the outcome.
Step-by-step checklist
- Allocate purchase price among land, building and acquired personal property.
- Document the ready-and-available date.
- Classify repairs versus improvements.
- Create a separate asset record for each improvement or appliance.
- Reconcile depreciation allowed or allowable when the property is sold.
Reconcile the result to the actual return, notice, lender disclosure or benefit statement before signing. Preserve the source documents, calculations and proof of submission; a software interview or account screen is not a substitute for evidence.
Records to keep
Keep the filed forms and schedules together with receipts, statements, contracts, account records and correspondence that establish amount, date, ownership and purpose. For an asset, credit or carryforward that affects later years, retain the origin-year worksheet through the final disposition or use year and the applicable limitation period.
Common mistakes to avoid
- Depreciating the land allocation.
- Starting depreciation at closing while major work prevents rental use.
- Expensing a structural improvement as a repair.
Correct an issuer or agency error through the documented correction process rather than silently changing a reported amount. When the dollars are material, a notice deadline is close, or the facts involve more than one jurisdiction, obtain advice from a credentialed professional who can review the complete record.
Related NavajoTax guides
Continue with rental appliance deductions, rental property taxes. These related pages explain connected rules, but the current official form or agency instruction controls the transaction you actually report.
Frequently asked questions
Are appliances depreciable?
Yes. Residential rental appliances are generally five-year GDS property, subject to elections and special rules.
Can a landlord depreciate a property used personally?
Only the rental or income-producing portion is depreciable, and mixed-use limitations apply.
What does placed in service mean?
The property is ready and available for its specific rental use, even if temporarily vacant.
Sources reviewed
Last reviewed: August 17, 2026. This article provides general educational information, not individualized tax, legal, investment, lending or benefits advice.