Bonus Depreciation Calculator: Estimate Your Real Estate Tax Savings
Use this bonus depreciation calculator to estimate how much of your real estate investment could qualify for an accelerated deduction and what that deduction could mean for your federal taxes.
Under current law, eligible property acquired and placed in service after January 19, 2025 generally qualifies for 100% bonus depreciation. For real estate investors, that usually means qualifying short-life assets within a property, not the entire building or the land.
Start with the calculator below, then use the examples and guide to understand your estimate.
Bonus Depreciation Calculator
Can't access the calculator? Open the real estate depreciation calculator.
Estimates are for planning purposes only. Actual deductions depend on asset eligibility, supported tax basis, acquisition and placed-in-service dates, applicable elections, and your tax situation. A deduction does not automatically create an immediate tax saving or refund.
How to Use the Bonus Depreciation Calculator
Gather your purchase documents and property details before running an estimate. These are the key inputs and assumptions to check, whether the calculator requests them directly or uses a default.
| Input or assumption | What to use | Why it matters |
|---|---|---|
| Property cost or tax basis | Your acquisition cost and applicable capitalized costs, not today's market value | Depreciation is based on your investment in the property |
| Land allocation | A reasonable, documented allocation to land | Land is not depreciable |
| Property type | Residential rental, multifamily, commercial, or another supported category | Asset mix and building recovery periods vary |
| Eligible asset percentage | A preliminary estimate of qualifying short-life assets | This determines the basis potentially eligible for bonus depreciation |
| Acquisition date | The date determined under the applicable acquisition rules | A closing date alone may not establish the bonus rate |
| Placed-in-service date | When the property is ready and available for its intended use | This generally determines when depreciation begins |
| Marginal federal tax rate | The rate applicable to income the deduction can offset | A deduction and its tax value are different amounts |
| Deduction availability | Whether you can use the loss in the current year | Passive activity and other limitations can delay the benefit |
Treat a default reclassification percentage as an assumption, not a study result. A calculator screens potential savings; it does not establish the classification of individual assets.
What Does the Calculator Estimate?
A useful bonus depreciation estimate separates three figures:
- Bonus-eligible basis: The cost allocated to assets that qualify for bonus depreciation.
- Bonus depreciation deduction: Eligible basis multiplied by the applicable bonus percentage.
- Potential current federal tax savings: The portion of the deduction you can currently use, multiplied by the applicable marginal federal tax rate.
For example, a $100,000 usable deduction at a 32% marginal federal rate has an estimated federal tax value of $32,000. It is not a $100,000 tax credit, and it does not necessarily produce a $32,000 refund.
If the calculator also reports total first-year depreciation, that figure may include regular MACRS depreciation in addition to bonus depreciation. Do not add the bonus deduction again if it is already included in the total.
Bonus Depreciation Rates for 2026 and Beyond
The One Big Beautiful Bill Act restored 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025, with no scheduled phaseout under current law. Eligible assets acquired before January 20, 2025 generally remain subject to the previous phaseout rules.
| Acquisition timing | Placed-in-service year | General bonus rate |
|---|---|---|
| After January 19, 2025 | After January 19, 2025, including 2026 and later | 100% |
| Before January 20, 2025 | 2025 | 40% |
| Before January 20, 2025 | 2026 | 20% |
| Before January 20, 2025 | 2027 or later | 0% |
This table summarizes the general Section 168(k) rules relevant to typical real estate components. Special rules apply to certain long-production-period property and aircraft. Elections can also change the allowance claimed.
Do not choose your rate based only on the year you order a cost segregation study. The asset's acquisition and placed-in-service history matters. A study performed in 2026 does not make an older property eligible for the restored 100% rate.
Written binding contracts, cancellation periods, contingencies, and self-construction rules can affect acquisition timing. Have your tax professional review those facts, especially for transactions near the January 2025 cutoff. IRS Notice 2026-11 explains the applicable timing guidance.
How to Calculate Bonus Depreciation
The core formula is:
Bonus depreciation deduction = eligible asset basis × applicable bonus rate
For a preliminary real estate estimate, work through these steps.
1. Determine Your Depreciable Basis
Start with the property's tax basis and subtract land and other nondepreciable amounts.
Depreciable basis = total property tax basis − nondepreciable basis
If you purchase a rental property for $500,000 and allocate $100,000 to land, your starting depreciable basis is $400,000, before any applicable capitalized acquisition costs or other adjustments.
Renovations may create additional depreciable assets, but their classification and placed-in-service dates need separate review. Do not assume every renovation cost receives the same treatment as the original purchase.
2. Estimate the Basis of Qualifying Assets
A cost segregation study identifies components that can be depreciated separately from the building, often as 5-, 7-, or 15-year property.
For an initial estimate:
Estimated eligible basis = depreciable basis × assumed eligible percentage
Using a hypothetical 20% assumption on a $400,000 depreciable basis produces $80,000 of estimated eligible assets. That percentage is illustrative, not a guaranteed result or an IRS safe harbor.
3. Apply the Correct Bonus Rate
If the $80,000 of assets qualifies for 100% bonus depreciation:
$80,000 × 100% = $80,000 bonus deduction
At a 20% bonus rate, the bonus portion would instead be $16,000. The remaining asset basis would generally be depreciated under the applicable regular MACRS rules.
If Section 179 applies and is elected, it is generally calculated before bonus depreciation and reduces the basis available for the bonus allowance. You cannot deduct the same unreduced basis twice.
4. Estimate the Tax Benefit You Can Actually Use
Potential current federal tax savings = currently usable deduction × applicable marginal federal tax rate
At a 37% marginal federal rate, a fully usable $80,000 deduction has a simplified estimated federal tax value of $29,600.
If the deduction is suspended under passive activity or other loss-limitation rules, the immediate benefit may be lower, or zero, even though depreciation was calculated correctly. Large deductions may also span multiple tax brackets, so a single-rate estimate can overstate the actual tax reduction.
5. Account for Regular Depreciation Separately
The remaining building basis generally continues to depreciate over 27.5 years for residential rental property or 39 years for nonresidential real property under the general depreciation system.
First-year building depreciation depends on the placed-in-service month under the mid-month convention. Simply dividing the building basis by 27.5 or 39 does not produce an accurate first-year deduction.
See IRS Publication 946 for eligibility, ordering rules, recovery periods, and depreciation conventions.
Bonus Depreciation Calculator Examples
These illustrative examples isolate the bonus depreciation deduction and its potential federal tax value. They assume qualifying assets acquired and placed in service after January 19, 2025, a 100% bonus rate, and full current use of the deduction.
They exclude capitalized closing costs, regular building depreciation, state taxes, study fees, and future recapture. Reclassification percentages are hypothetical assumptions, not promised study outcomes.
| Property example | Purchase price | Land allocation | Depreciable basis | Assumed eligible share | Bonus deduction | Potential federal savings at 37% |
|---|---|---|---|---|---|---|
| Single-family rental | $500,000 | $100,000 | $400,000 | 20% | $80,000 | $29,600 |
| Multifamily building | $2,000,000 | $400,000 | $1,600,000 | 25% | $400,000 | $148,000 |
| Commercial office building | $3,500,000 | $700,000 | $2,800,000 | 24% | $672,000 | $248,640 |
Worked Example: A $500,000 Rental Property
The single-family rental calculation is:
- Remove land: $500,000 − $100,000 = $400,000 depreciable basis.
- Estimate qualifying components: $400,000 × 20% = $80,000.
- Apply the bonus rate: $80,000 × 100% = $80,000 bonus depreciation.
- Estimate usable federal tax value: $80,000 × 37% = $29,600.
The remaining $320,000 of building basis is depreciated separately. If the $80,000 loss cannot be used this year, the calculator's $29,600 figure is not an immediate cash saving.
What Real Estate Assets Qualify for Bonus Depreciation?
For typical real estate investments, Section 168(k) generally applies to qualifying MACRS assets with recovery periods of 20 years or less. Depending on their function and classification, examples can include:
- Appliances and certain carpeting.
- Furniture and qualifying equipment.
- Certain specialized electrical or plumbing systems serving equipment rather than the building generally.
- Parking lots, fencing, and qualifying landscaping improvements.
- Eligible qualified improvement property, or QIP.
Not every fixture, floor covering, electrical system, or HVAC component qualifies. Classification depends on the asset's function and the applicable tax rules, not simply whether it is inside a building.
QIP generally means qualifying interior improvements made by the taxpayer to a nonresidential building after that building was first placed in service. It excludes building enlargements, elevators and escalators, and the internal structural framework.
Land and ordinary 27.5-year residential or 39-year commercial building basis do not qualify under Section 168(k). Property required to use the alternative depreciation system is generally ineligible. A separate, specialized Section 168(n) provision for qualified production property is outside this calculator guide's scope.
Why Your Estimated Savings May Differ From Your Tax Return
Before treating a calculator result as a planning decision, review these factors with your tax professional:
- Passive activity rules: Rental losses are generally passive. Real estate professional status alone does not automatically make every rental loss nonpassive; material participation and other applicable requirements matter.
- Short-term rental treatment: Some short-term rental activities fall outside the rental-activity definition, but material participation and other loss limits still need review.
- Basis and at-risk limits: These can restrict the amount deductible at the owner level.
- State conformity: Your state may require an addback or use a different depreciation schedule. Federal tax savings are not automatically state tax savings.
- Elections and ADS: Electing out of bonus depreciation or rules requiring ADS can change eligibility and deduction timing.
- Tax brackets and other return items: Actual tax liability is more complex than one deduction multiplied by one rate.
- Future sale: Accelerated depreciation reduces basis and can affect taxable gain and recapture later.
Bonus depreciation generally accelerates deductions that would otherwise be taken over time. Its value depends partly on when you can use those deductions and how long you expect to hold the property.
Bonus Depreciation Calculator FAQs
Is Bonus Depreciation 100% in 2026?
Generally, yes, for eligible property acquired and placed in service after January 19, 2025. Eligible property acquired before January 20, 2025 and placed in service in 2026 generally receives a 20% allowance under the legacy rules. Acquisition rules and elections can change the result.
Can I Deduct 100% of My Rental Property Purchase Price?
No. Land is not depreciable, and ordinary residential rental building basis does not qualify for Section 168(k) bonus depreciation. The 100% rate applies to the basis of eligible assets, not automatically to your total purchase price.
Does Bonus Depreciation Apply to Used Property?
Used assets can qualify if the acquisition requirements are met. Prior use by the taxpayer, certain related-party purchases, and carryover-basis transactions can prevent eligibility. Have your tax professional confirm the transaction qualifies.
Can I Claim Bonus Depreciation on a Property I Already Own?
You may be able to recover missed depreciation through a cost segregation study and an accounting method change using Form 3115. The property's original eligibility and placed-in-service rules still apply. Form 3115 is not the correct procedure in every situation; your tax professional should determine whether a method change or another correction is appropriate.
Can Bonus Depreciation Offset My W-2 Income?
Sometimes, but not automatically. Rental losses are generally subject to passive activity limitations. Qualifying nonpassive treatment may allow an offset against other income, subject to basis, at-risk, excess business loss, and other applicable rules. A calculator cannot determine your qualification.
Do I Need a Cost Segregation Study to Use the Calculator?
No. You can run a preliminary estimate before commissioning a study. However, a calculator does not supply asset-level support for a tax filing. A properly supported cost segregation study can help establish classifications and basis allocations for components within a property.
Can I Elect Out of Bonus Depreciation?
Yes. You can generally elect out by property class for the tax year. Spreading deductions over time may make sense depending on future income, current loss limitations, and your broader tax strategy.
Will I Have to Recapture Bonus Depreciation When I Sell?
A sale can trigger depreciation recapture. The treatment depends on asset classification, depreciation claimed, gain, and transaction structure. Section 1245 and Section 1250 property have different rules. Do not assume every cost-segregated asset is eligible for tax deferral in a 1031 exchange.
Is a Bonus Depreciation Calculator Accurate Enough for Filing Taxes?
No. It is a planning tool, not a substitute for a supported depreciation schedule or professional review. Accurate filing requires verified basis, asset classifications, dates, elections, and applicable loss limitations.
Turn Your Estimate Into a Property-Specific Plan
The bonus depreciation calculator is a starting point. A supported cost segregation analysis can identify which components qualify, how much basis belongs to them, and the depreciation schedules your tax professional needs.
Request a free cost segregation estimate from R.E. Cost Seg to explore your property's potential. Then review deduction availability and the overall tax impact with your CPA or EA before filing.