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Rental Property Depreciation in Texas

K-04

Run the Rental Property Depreciation on Texas numbers: median home value $296,000, 1.31% property tax, and a worked Texas example with every formula shown.

Reviewed October 2026 · TX defaults preloaded · Free, no sign-up · Formulas shown

Property inputs

Basis

Land never depreciates. County assessments and appraisals usually split it out.

Closing costs, attorney fees, and immediate improvements added to the basis.

Service and tax assumptions

The month the property is ready to rent, not the closing date if you renovated first.

Combined federal and state rate. Passive activity rules may suspend rental losses.

This building lets you deduct $8,796N2 a year for 27.5 years, worth $2,111N4 a year in tax at a 24% rate.

Plan K-04Placed in service in January: $8,430 in the first tax year. $59,000 of land never depreciates. Estimates, not tax advice.

This building lets you deduct $8,796 a year for 27.5 years, worth $2,111 a year in tax at a 24% rate.

Depreciable basisN1
$241,900
building plus capitalized costs
Per monthN2
$733
straight line
First tax yearN3
$8,430
in service from January
Tax saved, all yearsN4
$58.1K
at 24%

Recovering the basis over 27.5 years

IRS Table A-1, mid-month convention

Full depreciation schedule

Every tax year, computed live

Tax yearRateDeductionRecoveredTax saved
13.485%$8,430$8,430$2,023
23.636%$8,796$17,226$2,111
33.636%$8,796$26,023$2,111
43.636%$8,796$34,819$2,111
53.636%$8,796$43,615$2,111
63.636%$8,796$52,412$2,111
73.636%$8,796$61,208$2,111
83.636%$8,796$70,004$2,111
93.636%$8,796$78,801$2,111
103.636%$8,796$87,597$2,111
113.636%$8,796$96,393$2,111
123.636%$8,796$105,190$2,111
133.636%$8,796$113,986$2,111
143.636%$8,796$122,783$2,111
153.636%$8,796$131,579$2,111
163.636%$8,796$140,375$2,111
173.636%$8,796$149,172$2,111
183.636%$8,796$157,968$2,111
193.636%$8,796$166,764$2,111
203.636%$8,796$175,561$2,111
213.636%$8,796$184,357$2,111
223.636%$8,796$193,153$2,111
233.636%$8,796$201,950$2,111
243.636%$8,796$210,746$2,111
253.636%$8,796$219,543$2,111
263.636%$8,796$228,339$2,111
273.636%$8,796$237,135$2,111
281.970%$4,765$241,900$1,144

Educational estimate, not tax advice. Depreciation is recaptured (generally at up to 25%) when you sell, and passive activity rules may suspend losses. Confirm your basis and schedule with a CPA using IRS Publication 946.

Depreciation is the largest paper expense a rental owner gets to claim, and it is the same everywhere — 27.5 years, straight line, mid-month convention, federal law. What differs by state is how much the deduction is worth, because Texas has no wage income tax, so depreciation shaves federal tax only. On a typical Texas rental purchased near $295,000, the schedule below writes off $241,900 of building value and returns roughly $2,111 per year in tax savings at the assumed rate.

Texas depreciation snapshot

Purchase priceStatewide typical home value (Zillow)$295,000
Land shareTypical for the south — land is never depreciable20%
Depreciable basisPrice − land + capitalized closing costs$241,900
Annual depreciation1 ÷ 27.5 of the basis, straight line$8,796
First-year depreciationMid-month convention on a January start$8,430
Assumed combined tax rateTexas has no wage income tax — use the federal rate only24%

Home values: Zillow, September 2026. Income, rent, and property tax: U.S. Census Bureau ACS, 2024. Insurance is an estimate. Sources · How every state compares

The Texas depreciation schedule

Depreciable basis$241,900
Recovery period27.5 years (MACRS GDS)
Full-year depreciationHeadline result$8,796
Monthly deduction$733
First-year (mid-month) deduction$8,430
Annual tax savings at the assumed rateHeadline result$2,111
Total deducted over the recovery period$241,900
Claiming $8,796 of deduction each year reduces taxable rental income by that amount — worth $2,111 annually at a 24% combined rate (federal only, since Texas has no wage income tax). Over the full 27.5-year schedule the same $241,900 of basis is recovered, and the deduction is recaptured at sale — depreciation is a deferral, not a gift.

Texas-specific considerations

State income tax and the depreciation deduction

Texas collects no wage income tax, so texas has no wage income tax, so depreciation shaves federal tax only. Use your federal marginal rate alone — a combined-rate default overstates the benefit and understates your after-tax cost of ownership.

Basis adjustments in Texas

Texas has no state income tax and one of the highest effective property tax rates in the US, levied by county, school district, and special districts; the homestead exemption applies only to a primary residence. Those property taxes are deductible as operating expenses, not capitalized — but closing costs, attorney fees, and immediate improvements made in the first year do join the depreciable basis, which is why the example adds $5,900 of capitalized costs. State transfer taxes paid at closing also capitalise into basis.

Selling a Texas rental

Depreciation taken — or "allowed or allowable," which includes depreciation you never claimed — is recaptured at up to 25% federal rate on sale. Texas's treatment of that recapture varies; a 1031 exchange into another investment property defers both the capital gain and the recapture, which is why it is the standard exit for long-holding Texas rental owners.

How to calculate your Texas rental depreciation

  1. Confirm the property is placed in service (available for rent) — that starts the clock, and the mid-month convention means the first and last years claim partial months.
  2. Split the purchase price between land and building. The default uses 20% land for the Texas market; an appraisal or county split is more accurate.
  3. Add closing costs and any immediate improvements to the basis — capitalized costs raise every future deduction.
  4. Set the month placed in service; the schedule re-dates the mid-month convention automatically.
  5. Set the combined federal + Texas state marginal rate to estimate tax savings. Since there is no state wage income tax here, the federal rate is the whole story.

Methodology

Residential rental property recovers its depreciable basis over 27.5 years under MACRS GDS (IRS Publication 946, Table A-1): straight-line at 1/27.5 of the basis per full year, with a mid-month convention in the year placed in service — the first year claims half a month for the month of service, and the final stub year closes the schedule to exactly 100%.

Land is removed from basis before the schedule starts, because land does not wear out. The Texas defaults use the statewide typical home value and a region-typical land share; substitute your appraisal and actual closing costs for a precise schedule.

Sources

Read the full methodology, worked example, and caveats in the national Rental Property Depreciation guide.

Texas FAQ

Does Texas allow rental property depreciation?
Yes — and so does every other state. Depreciation is a federal tax rule (MACRS, 27.5 years for residential rentals) that every landlord may claim regardless of where the property sits. What varies is the value: texas has no wage income tax, so depreciation shaves federal tax only.
How much rental property depreciation can I claim on a Texas home?
On the example above, $8,796 per year — the $241,900 depreciable basis ÷ 27.5 — worth about $2,111 in tax savings at a 24% combined rate. The first year claims $8,430 because the mid-month convention counts only part of the month placed in service.
Is the depreciation deduction worth more in Texas than in a no-income-tax state?
No — Texas has no wage income tax, so the deduction only shelters federal tax. If your marginal federal rate is 24%, each dollar of depreciation is worth 24 cents. A landlord in a taxed state at the same federal bracket could shelter 30 cents or more per dollar.
What happens to depreciation when I sell my Texas rental?
It is recaptured: the IRS taxes depreciation taken (or allowable) at up to 25% federal rate when you sell at a gain. A 1031 exchange into another investment property defers both the gain and the recapture, which is the standard exit for long-term Texas rental owners. State treatment of the recapture varies — confirm with a Texas tax professional before filing.

Other state editions

Every state gets its own edition of the Rental Property Depreciation, preloaded with that market's typical values, tax rates, and insurance costs:

AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

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