MACRS 27.5-Year Residential Rental Property — Depreciation Schedule 2025 & 2026
Residential rental property (apartments, single-family rentals, duplexes) is 27.5-year MACRS property. Straight-line depreciation over 27.5 years with the mid-month convention — IRS Publication 946 Table A-6.
Recovery period
27.5 years
mid-month convention
Section 179 eligible?
No
Real property excluded
Bonus depreciation
N/A
Not eligible — use cost segregation
What qualifies as 27.5-Year residential rental property?
- Single-family rental homes
- Duplexes, triplexes, and fourplexes
- Apartment buildings (80%+ dwelling income)
- Condominiums and cooperatives held for rental
- Manufactured homes on leased land
Source: IRS Publication 946, Table A-6. If your asset is not explicitly classified, consult Rev. Proc. 87-56 asset-class tables or default to 7-year property.
Straight-line depreciation schedule — $300,000 asset
Worked example: a $300,000 residential rental property placed in service with no Section 179 and no bonus depreciation, showing the raw 27.5-Year straight-line schedule.
| Tax year | Rate | Deduction | Accumulated | Book value |
|---|---|---|---|---|
| 1 | 1.82% | $5,454.55 | $5,454.55 | $294,545.45 |
| 2 | 3.64% | $10,909.09 | $16,363.64 | $283,636.36 |
| 3 | 3.64% | $10,909.09 | $27,272.73 | $272,727.27 |
| 4 | 3.64% | $10,909.09 | $38,181.82 | $261,818.18 |
| 5 | 3.64% | $10,909.09 | $49,090.91 | $250,909.09 |
| 6 | 3.64% | $10,909.09 | $60,000.00 | $240,000.00 |
| 7 | 3.64% | $10,909.09 | $70,909.09 | $229,090.91 |
| 8 | 3.64% | $10,909.09 | $81,818.18 | $218,181.82 |
| 9 | 3.64% | $10,909.09 | $92,727.27 | $207,272.73 |
| 10 | 3.64% | $10,909.09 | $103,636.36 | $196,363.64 |
| 11 | 3.64% | $10,909.09 | $114,545.45 | $185,454.55 |
| 12 | 3.64% | $10,909.09 | $125,454.54 | $174,545.46 |
| 13 | 3.64% | $10,909.09 | $136,363.63 | $163,636.37 |
| 14 | 3.64% | $10,909.09 | $147,272.72 | $152,727.28 |
| 15 | 3.64% | $10,909.09 | $158,181.81 | $141,818.19 |
| 16 | 3.64% | $10,909.09 | $169,090.90 | $130,909.10 |
| 17 | 3.64% | $10,909.09 | $179,999.99 | $120,000.01 |
| 18 | 3.64% | $10,909.09 | $190,909.08 | $109,090.92 |
| 19 | 3.64% | $10,909.09 | $201,818.17 | $98,181.83 |
| 20 | 3.64% | $10,909.09 | $212,727.26 | $87,272.74 |
| 21 | 3.64% | $10,909.09 | $223,636.35 | $76,363.65 |
| 22 | 3.64% | $10,909.09 | $234,545.44 | $65,454.56 |
| 23 | 3.64% | $10,909.09 | $245,454.53 | $54,545.47 |
| 24 | 3.64% | $10,909.09 | $256,363.62 | $43,636.38 |
| 25 | 3.64% | $10,909.09 | $267,272.71 | $32,727.29 |
| 26 | 3.64% | $10,909.09 | $278,181.80 | $21,818.20 |
| 27 | 3.64% | $10,909.09 | $289,090.89 | $10,909.11 |
| 28 | 3.64% | $10,909.09 | $299,999.98 | $0.02 |
| 29 | 1.82% | $0.02 | $300,000.00 | $0.00 |
Rates from IRS Publication 946 Table A-6. Computed at build time — no hardcoded schedules.
Section 179 and bonus depreciation — 2025 vs 2026
| Parameter | 2025 (OBBBA) | 2026 (indexed) |
|---|---|---|
| §179 deduction limit | $2,500,000 | $2,560,000 |
| §179 phase-out threshold | $4,000,000 | $4,090,000 |
| Bonus depreciation (post-2025-01-20) | 100% | 100% |
| Bonus depreciation (pre-2025-01-20) | 40% (TCJA phase-down) | — |
| Applies to this asset class? | ✗ Building not eligible | ✗ Building not eligible |
Source: One Big Beautiful Bill Act (signed July 2025) and IRS Rev. Proc. 2025-32 (2026 inflation adjustments). Pre-OBBBA property uses TCJA phase-down: 80% (2023), 60% (2024), 40% (2025 pre-1/20).
Common mistakes and gotchas
- Only the building depreciates — land is never depreciable. Typical allocation is 75–80% to building, 20–25% to land, based on tax-assessor ratios or appraisal.
- A property must be >80% "dwelling unit" gross rental income to qualify as residential rental. Mixed-use (e.g., retail downstairs + apartment upstairs) requires the 80% test annually.
- Cost segregation studies can reclassify parts of the building (carpet, appliances, fixtures, land improvements) into 5/7/15-year classes — accelerating ~20-30% of the depreciable basis.
- Neither §179 nor bonus depreciation applies to the 27.5-year building itself. But cost-seg carve-outs into 5/7/15-year classes DO qualify.
- Depreciation starts the month the property is placed in service (available for rent), not the month of purchase.
Frequently asked questions
How long do I depreciate residential rental property?
Residential rental property is depreciated over 27.5 years using straight-line depreciation with the mid-month convention (IRS Pub 946 Table A-6). An $300,000 rental (building-only, 80% allocation from $375k total) deducts about $10,909 per year.
Does Section 179 apply to rental property?
No — the 27.5-year residential rental building is NOT §179-eligible, and traditional bonus depreciation does not apply. However, cost-segregation studies can reclassify appliances, carpets, and land improvements into 5/7/15-year classes that ARE eligible for §179 and bonus.
Can I bonus depreciate rental property?
The building itself (27.5-year real property) does not qualify for bonus depreciation. Short-life components identified in a cost-segregation study — 5-year (appliances, carpet), 7-year (furniture), 15-year (land improvements) — DO qualify for 100% bonus post-OBBBA.
What is the mid-month convention?
The mid-month convention treats all real property (27.5- and 39-year) as placed in service in the middle of the month, regardless of the actual date. A property placed in service on March 15 gets 9.5 months of depreciation in year one; placed on March 31 also gets 9.5 months.
Do I have to recapture depreciation when I sell?
Yes — Section 1250 recapture applies. Depreciation taken on residential rental reduces basis and is taxed at up to 25% on sale (unrecaptured §1250 gain). Factor this into any hold-vs-sell decision.
Other MACRS asset classes
MACRS 5-Year Property
5-year recovery · half-year convention · Table A-1
MACRS 7-Year Property
7-year recovery · half-year convention · Table A-1
MACRS 15-Year Property
15-year recovery · half-year convention · Table A-1
MACRS 39-Year Nonresidential Real Property
39-year recovery · mid-month convention · Table A-7a
Sources
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