Commercial Property Depreciation Calculator

Calculator Inputs

Purchase Price ($)

Land Value ($)

Additional Improvements ($)

Closing Costs ($)

Renovation Cost ($)

Salvage Value ($)

Useful Life (Years)

Projection Years

Income Tax Rate (%)

Depreciation Method

Convention

Placed-in-Service Month

Land is not depreciable. The calculator focuses on the building and capitalized improvement basis.

Example Data Table

Input Item	Example Value
Purchase Price	$1,250,000
Land Value	$250,000
Additional Improvements	$40,000
Closing Costs	$15,000
Renovation Cost	$60,000
Salvage Value	$0
Useful Life	39 years
Tax Rate	24%

Formula Used

Building Basis = (Purchase Price − Land Value) + Additional Improvements + Closing Costs + Renovation Cost

Depreciable Basis = Building Basis − Salvage Value

Straight-Line Depreciation = Depreciable Basis ÷ Useful Life

Double Declining Balance = Book Value × (2 ÷ Useful Life)

Accumulated Depreciation = Sum of yearly depreciation amounts

Ending Book Value = Building Basis − Accumulated Depreciation

Tax Shield = Depreciation × Tax Rate

This tool separates land from the building because land is generally not depreciated. It then applies your selected method and convention to estimate annual depreciation, accumulated depreciation, remaining book value, and potential tax shield.

How to Use This Calculator

Enter the total purchase price of the commercial property.
Enter the land value separately so the non-depreciable portion is excluded.
Add any capitalized improvements, closing costs, and renovation costs.
Choose a salvage value, if relevant for your internal analysis.
Set the useful life and the number of projection years.
Select the depreciation method and timing convention.
Enter the placed-in-service month for mid-month treatment.
Provide the expected income tax rate to estimate annual tax shield.
Click the calculate button to view results above the form.
Use the CSV or PDF buttons to export the schedule.

FAQs

1. Why is land value excluded from depreciation?

Land usually does not wear out or become obsolete like a building. Because of that, depreciation calculations normally apply only to the building and capital improvements, not the land component of the purchase.

2. What costs should be included in building basis?

Building basis may include the depreciable structure value, capitalized closing costs, qualified improvements, and major renovation costs. Routine maintenance is usually treated differently and is not commonly added to depreciation basis.

3. When should I use straight-line depreciation?

Straight-line is helpful when you want a consistent annual expense. It spreads depreciation evenly across the useful life, making planning, budgeting, and long-range forecasting easier to interpret.

4. What does double declining balance show?

Double declining balance accelerates depreciation into earlier years. It can illustrate faster book-value reduction and larger early tax shield estimates, though actual tax treatment may depend on jurisdiction and asset classification.

5. Why does the convention matter?

The convention changes how much depreciation is recognized in the first and sometimes final year. Full-year, half-year, and mid-month approaches can materially affect early schedule values and tax shield timing.

6. Is this calculator suitable for tax filing?

This calculator is best for planning, comparison, and internal analysis. Tax filing often requires jurisdiction-specific rules, class lives, recapture treatment, and professional review before numbers are reported officially.

7. What is the tax shield in the results?

The tax shield estimates how much tax expense may be reduced through depreciation. It is calculated by multiplying annual depreciation by your entered tax rate.

8. Can I use this for renovated commercial buildings?

Yes. You can add renovation and improvement costs to better reflect the depreciable investment. This makes the output more useful for acquisition analysis, refinancing reviews, and hold-versus-sell comparisons.